Anderson Company, a 90% Owned Subsidiary of Philbin Corporation, Transfers

question 55

Multiple Choice

Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin's intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020. Assume the equity method is used. The following data are available pertaining to Anderson's income and dividends.
For consolidation purposes, what amount would be debited to cost of goods sold for the 2021 consolidation worksheet with regard to the unrecognized intra-entity gross profit remaining in ending inventory with respect to the 2021 transfer of merchandise?

• A)$1,000.
• B)$800.
• C)$3,000.
• D)$2,400.
• E)$900.

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Definitions:

Callable Bond

is a type of bond that gives the issuer the right to redeem the bond before its maturity date, under specific conditions.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain time frame.

Transactions Costs

Expenses incurred when buying or selling goods or services, including the costs of trading financial instruments.