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

question 37

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 sale referred to above was a downstream sale,by what amount must Inventory on the consolidated balance sheet be reduced to reflect the correct balance as of the end of 2014?

• A)$3,000
• B)$10,000
• C)$14,000
• D)$20,000

---

Definitions:

Mild Mania

A less severe form of mania characterized by elevated mood, increased activity or energy levels, but not severe enough to cause significant impairment in daily functioning.

Unipolar Depression

A mental health disorder highlighted by a pervasive low mood, lack of motivation, and loss of pleasure in previously enjoyed activities.

Onset

The beginning or start of something, such as a disease, symptom, or process.

Cognitive Symptom

Symptoms related to mental processes such as memory, attention, and problem-solving, often indicative of neurological or psychiatric conditions.