As Part of the Consolidation Process,any Unrealised Profits Arising from Intragroup

question 10

Multiple Choice

As part of the consolidation process,any unrealised profits arising from intragroup merchandising transactions are eliminated.If the intragroup transactions are inter-segment transactions,the effect of this elimination on the segment data reported by subsidiaries will be to:

• A) reduce the relevant segment result reported by the subsidiary.
• B) have no effect on the segment result reported by the subsidiary.
• C) reduce both the segment result reported by the subsidiary and reduce the consolidated profit of the group.
• D) none of the above.

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Definitions:

Ownership and Control

The legal rights to possess, use, and manage assets or property, and the ability to direct the operations and activities of an entity or resource.

Limited Liability

A legal structure that limits the financial liability of investors or owners to the amount they have invested in a company, protecting personal assets.

Transferability of Ownership

The capability to legally transfer the title or ownership of an asset or property from one entity to another.

Sole Proprietorship

A business structure in which a single individual owns and operates the business, bearing sole responsibility for its debts and obligations.