Which of the Following Events Is an Intercompany Transaction That

question 47

Multiple Choice

Which of the following events is an intercompany transaction that requires the deferral and later recognition of income?

• A)accrual of rentals on a lease of real property owned by one group member that is used by another group member; both group members use the accrual method of accounting
• B)cash dividend payment from a subsidiary corporation to its parent corporation
• C)sale of inventory from a subsidiary corporation to its parent corporation
• D)None of the above transactions require the deferral and later recognition of income.

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Definitions:

Ratchet

A mechanical device that allows continuous linear or rotary motion in one direction while preventing motion in the opposite direction.

IFI Fastener

An IFI fastener refers to a fastening device that adheres to standards set by the Industrial Fasteners Institute, often indicating a specific quality or dimensional guideline.

Radial Marks

Visible lines or marks on a component, such as a brake disc, indicating radial movement or stress which may suggest potential failure points.

Grade Fastener

A classification system for fasteners, such as bolts and screws, indicating their material strength and durability.