A Subsidiary Sold Inventories to Its Parent Entity in the Year

question 14

Multiple Choice

A subsidiary sold inventories to its parent entity in the year ended 30 June 2022 at a profit of $8 000. At 30 June 2022 the parent had not sold the inventories. The company tax rate is 30%. The consolidation worksheet prepared at 30 June 2022 will contain the following adjustment entry for inventories:

• A) CR Inventories $2 400.
• B) DR Inventories $2 400.
• C) DR Inventories $8 000.
• D) CR Inventories $8 000.

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Definitions:

Competitive Level

A state in a market where firms are able to enter and exit freely, and prices are determined by supply and demand.

Industry

A classification of businesses that perform similar types of work or produce similar goods and services.

Output

The total amount of goods or services produced by a company or economy.

Marginal Social Cost

Sum of the marginal cost of production and the marginal external cost.