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

question 97

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 2020, which of the following accounts would be credited to defer unrecognized 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.

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Definitions:

Merging

The process of combining two or more entities into one, with the goal of enhancing competitive advantages or achieving efficiencies.

Corporate Cultures

The collection of beliefs, values, behaviors, customs, and attitudes that characterize a company or organization.

Adaptive Cultures

Organizational cultures that are flexible, resilient, and responsive in adapting to changing environments and challenges.

Subcultures

Groups within a larger culture that have their own distinct norms, values, behaviors, or beliefs.