What Is the Amount of Unrealised Profit That Needs to Be

question 40

Multiple Choice

What is the amount of unrealised profit that needs to be eliminated at the end of the period,in the following situation,where Morecombe Plc is the parent of Wise Plc? (Ignore the tax effect.)
Morecombe purchases 500 units of inventory for £20 each.Morecombe sells this entire inventory to Wise at a mark up of 25%.Wise then sells half of the inventory to an external party.Half of the remaining amount (after the external sale) is sold back to Morecombe for £2500.

• A)cannot determine from the information given
• B)£300
• C)£625
• D)£1250

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Definitions:

SSR

Sum of Squares due to Regression, indicating the proportion of variance in the dependent variable explained by the independent variables in a regression model.

SST

Sum of Squares Total, a measure in statistics that quantifies the total variance within a dataset.

Multiple Coefficient

A term used in multiple regression analysis that indicates the strength and direction of a relationship between variables.

Determination

The measure of how well a set of data points fit a statistical model.