Alice Plc Sold Inventory Items to Its Subsidiary Mad Hatter

question 8

Multiple Choice

Alice Plc sold inventory items to its subsidiary Mad Hatter Plc and had the following intercompany transactions:
Cost of inventory €100 000 sold for €125 000 for the year ended 30 June 2012.Half of the inventory items were sold by Mad Hatter Plc to external parties before the financial year end 30 June 2012.
Cost of inventory €75 000 sold for €100 000 for the year ended 30 June 2013.Half of the inventory items were sold by Mad Hatter Plc to external parties before the financial year end 30 June 2013.
Ignoring taxes,which of the following statements is correct with respect to this transaction only for the year ended 30 June 2013?

• A)Consolidated sales will decrease by €125 000.
• B)Consolidated sales will increase by €25 000.
• C)Consolidated profit will decrease by €12 500.
• D)There will be no change in the consolidated profit.

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Definitions:

Antitrust Policy

Regulations and laws put in place to prevent monopolies, promote competition, and protect consumers from unfair business practices.

Treatment

An intervention or set of interventions, typically in a medical or psychological context, designed to address a health problem or disorder.

Tying Contracts

Agreements where the sale of one product is conditional on the purchase of another product.