Companies A,B and C Are All Part of the One

question 39

Multiple Choice

Companies A,B and C are all part of the one economic entity,but are all separate legal entities required to prepare their own financial statements.Company A sold Company B inventory that cost $56 000 for $78 000.At the end of the same period Company B has three-quarters of that inventory still on hand and the rest has been sold to an entity outside the economic group.At what amount should the inventory remaining in Company B be recorded in the consolidated statements?

• A) $14 625
• B) $56 000
• C) $58 500
• D) $42 000

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Definitions:

Self-regulation

The ability of an individual or organization to monitor and control their own behavior or operations, often without external intervention.

Core Thinking Skill

A fundamental ability to engage in cognitive processes such as analysis, synthesis, problem-solving, and evaluation.

Analytical

Pertaining to the systematic examination or evaluation of details in order to understand or explain something.

Disposed

Having a particular inclination or tendency towards something, either naturally or through conditioning.