Jay Inc Owns 80% of Tesla Inc

question 39

Multiple Choice

Jay Inc. owns 80% of Tesla Inc. and uses the cost method to account for its investment. The 2013 income statements of both companies are shown below. On January 1, 2013, Tesla sold equipment to Jay at a profit of $3,000. The equipment had a remaining useful life of twenty years on that date. Both companies are subject to an effective tax rate of 40%. The amount of gross profit appearing on Jay's 2013 Consolidated Income Statement would be:

• A) $147,000.
• B) $147,600.
• C) $150,000.
• D) $153,000.

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Definitions:

Collecting Data

The process of gathering information in a systematic way to help in analysis, decision making, and reporting.

Response Consistency

A measure of how similarly a person responds to similar or repeated stimuli or questions over time.

Behavioural Order

A concept referring to the structured or organized patterns of behavior observed in individuals or groups.

Negative Relationship

A type of correlation where one variable increases as the other decreases, indicating an inverse relationship between the two.