Lilo Plc Sells Inventory Items to Its Subsidiary Stitch Plc

question 2

Multiple Choice

Lilo Plc sells inventory items to its subsidiary Stitch Plc.If during the financial year 2013,the unrealised profits in ending inventory in Stitch Plc exceeds that of its unrealised profits in beginning inventory,which of the following statements is correct with respect to Lilo Plc's consolidated financial statements after considering these transactions only?

• A)Consolidated profit will decrease.
• B)Consolidated deferred tax liability will increase.
• C)Consolidated ending inventory will decrease.
• D)Consolidated sales will be unaffected.

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Definitions:

Parent-Country National

An employee who is a citizen of the country in which the employing organization's headquarters is located, working in a branch or subsidiary in another country.

Third-Country National

An individual who is working in a country that is neither their home country nor the country of the company's headquarters to which they are assigned.

International Organization

An organization that sets up one or a few facilities in one or a few foreign countries.

Production Costs

The total expenses incurred in the process of creating a product or service, including materials, labor, and overhead costs.