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 per cent.At the end of the period,100 units are on hand.

• A) $1,000.
• B) $2,000.
• C) $3,000.
• D) $5,000.
• E) $10,000.

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Definitions:

Normal Return

The typical profit that is expected from a standard investment or business activity, accounting for the cost of capital.

Computer Software

Programs and operating information used by a computer to perform specific tasks.

Total Revenue

The total income received by a firm from the sale of its goods or services before any costs or expenses are deducted.

Opportunity Cost

The value of the next best alternative that is forgone when making a decision.