Teckel Enterprises Owns 100% of Dachsund Limited

question 44

Multiple Choice

Teckel Enterprises owns 100% of Dachsund Limited. At the beginning of the fiscal year, there was a profit in Teckel Enterprises inventory of $15,000 on goods acquired from Dachsund Limited in the previous period. The tax rate is 40%. What is the required consolidated financial statement adjustments?

• A)Decrease Beginning Retained Earnings: $9,000, decrease Cost of Goods Sold: $15,000, and increase Income Tax Expense: $6,000.
• B)Increase Beginning Retained Earnings: $9,000, increase Cost of Goods Sold: $6,000, and decrease Income Tax Expense: $6,000.
• C)Decrease Beginning Retained Earnings: $15,000 and decrease Cost of Goods Sold: $15,000.
• D)Decrease Beginning Retained Earnings: $9,000 and decrease Cost of Goods Sold: $9,000.

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