Strickland Company Sells Inventory to Its Parent, Carter Company, at a Profit

question 61

Multiple Choice

Strickland Company sells inventory to its parent, Carter Company, at a profit during 2020. Carter sells one-third of the inventory in 2020.In the consolidation worksheet for 2021, assuming Carter uses the initial value method of accounting for its investment in Strickland, which of the following accounts would be credited to defer recognition of intra-entity gross profit with regard to the 2020 intra-entity transfers?

• A) Retained earnings.
• B) Cost of goods sold.
• C) Inventory.
• D) Investment in Strickland Company.
• E) Sales.

---

Definitions:

Genetics

The scientific study of heredity and the variation of inherited characteristics.

Gender

A social construct relating to behaviors, activities, and roles that a society considers appropriate for men, women, and non-binary people.

Menopause

The period marking the end of a woman's reproductive years, signified by the cessation of menstrual periods for 12 months.

Menorrhagia

Excessive or prolonged menstrual bleeding at regular menstrual cycle intervals, often leading to anemia.