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

question 17

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 2014 and 2015.

During 2014, one company sold inventory to the other company for $50,000 which cost the transferor $40,000. As of the end of 2014, 30% of the inventory was unsold. In 2015, 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 2015?

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

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Definitions:

Milgram's Study

Experiments led by Stanley Milgram in social psychology that assessed how much individuals would follow orders from an authority figure to do things that go against their own moral judgment.

Obedience to Authority

The act of following orders or directives from someone in a position of power, often without questioning them.

Highest Levels

Describes the uppermost tier or echelon in a hierarchy, system, or field, often indicating the peak of achievement, authority, or quality.

Milgram

A psychologist who conducted experiments on obedience, demonstrating the power of authority in compelling individuals to act against their personal conscience.