Penny Ltd Sells Inventory Items to Its Subsidiary Bolt Ltd

question 2

Multiple Choice

Penny Ltd sells inventory items to its subsidiary Bolt Ltd.If during the financial year 2013,the unrealised profits in ending inventory in Bolt Ltd is less than its unrealised profits in beginning inventory,which of the following statements is correct with respect to Penny Ltd's consolidated financial statements after considering these transactions only?

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

---

Definitions:

Clarity

The quality of being easily understood, free from ambiguity, and communicated in a simple manner.

Spelling and Grammar

The rules and conventions related to the correct writing of words and construction of sentences.

Proofreading

The process of reviewing a text to correct errors in spelling, punctuation, grammar, and formatting.

Fresh

denotes something new or not previously encountered.