Use the Following Information to Answer the Question(s)below

question 12

Multiple Choice

Use the following information to answer the question(s) below.
Paggle Corporation owns 80% of Spillway Inc.'s common stock that was purchased at its underlying book value.At the time of purchase,the book value and fair value of Spillway's net assets were equal.The two companies report the following information for 2011 and 2012.
During 2011,one company sold inventory to the other company for $50,000 which cost the transferor $40,000.As of the end of 2011,30% of the inventory was unsold.In 2012,the remaining inventory was resold outside the consolidated entity.

-If the intercompany sale mentioned above was an upstream sale,what will be the reported amount of total consolidated sales revenue for 2012?

• A)$1,025,000
• B)$1,900,000
• C)$1,950,000
• D)$2,000,000

---

Definitions:

United States Congress

The bicameral legislative body of the federal government of the United States, consisting of the House of Representatives and the Senate.

Days

Units of time equal to 24 hours, representing one complete rotation of the Earth on its axis.

Administrative Procedures Act

A United States federal statute that governs the way administrative agencies of the federal government may propose and establish regulations.

Enabling Statute

Legislation that grants a new agency or body the authority to act and outlines the scope of its powers.