What Is the Amount of Unrealised Profit That Needs to Be

question 21

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 Barker Limited is the parent of Corbett Limited? (Ignore the tax effect.)
Barker purchases 500 units of inventory for $20 each.Barker sells this entire inventory to Corbett at a mark-up of 50%.At the end of the period,100 units are on hand.

• A) $1000
• B) $2000
• C) $3000
• D) $5000

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Definitions:

Low Level Managers

Managers who operate at the lowest tier of an organization's hierarchy, typically overseeing the work of non-managerial employees and focusing on day-to-day operations.

Discounted Payback

A capital budgeting method that calculates the amount of time required to recoup the initial investment in present value terms.

Pre-Specified Number

A fixed number that has been determined beforehand, often used in contracts, agreements, or computational formulas.

Investment Acceptance

The approval process for allocating resources or capital into investments, projects, or financial assets.