Fraker, Inc

question 92

Essay

Fraker, Inc. owns 90 percent of Richards, Inc. and bought $200,000 of Richards' inventory in 2013. The transfer price was equal to 30 percent of the sales price. When preparing consolidated financial statements, what amount of these sales is eliminated?

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Definitions:

Construct Validity

The degree to which a test or tool measures the theoretical construct or trait it is intended to measure, reflecting its accuracy and appropriateness of inferences drawn from test scores.

Discriminant Validity

A property demonstrating that a test or scale that is not closely related to variables from which it is theoretically distinct.

Construct Validity

The degree to which a test or instrument accurately measures the theoretical construct or psychological concept it intends to.

Content Validity

The degree to which a test or instrument covers the representative breadth of the topic or construct it is intended to measure.