The Material Sale of Inventory Items by a Parent Company

question 20

Multiple Choice

The material sale of inventory items by a parent company to an affiliated company

• A)enters the consolidated revenue computation only if the transfer was the result of arm's length bargaining.
• B)affects consolidated net income under a periodic inventory system but not under a perpetual inventory system.
• C)does not result in consolidated income until the merchandise is sold to outside parties.
• D)does not require a working paper adjustment if the merchandise was transferred at cost.

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Definitions:

Unpredictability

The quality of being unable to be foreseen or declared in advance.

Stressful

Characterized by or causing mental, emotional, or physical strain or tension.

Uplifts

Positive experiences or small victories that improve one’s mood or emotional state, often countering the impact of stress.

Emotional Expressions

Manifestations of feelings that may involve gestures, facial expressions, and vocal tone, serving communicative functions in social interactions.