On January 1,2014,Plastam Industries Acquired an 80% Interest in Sparta

question 38

Multiple Choice

On January 1,2014,Plastam Industries acquired an 80% interest in Sparta Company to assure a steady supply of Sparta's inventory that Plastam uses in its own manufacturing businesses.Sparta sold 100% of its output to Plastam during 2014 and 2015 at a markup of 125% of Sparta's cost.Plastam had $12,000 of these items remaining in its inventory at December 31,2015.If Plastam neglected to eliminate unrealized profits from all intercompany sales from Sparta,the inventory on the consolidated balance sheet at December 31,2015 was

• A)overstated by $1,920.
• B)understated by $1,920.
• C)overstated by $2,400.
• D)understated by $2,400.

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Definitions:

Group Affiliations

The connections or associations an individual has with certain groups or organizations, often shaping one's identity and social interactions.

Totemic Behavior

Practices and beliefs related to totemism, where certain natural objects, animals, or plants are seen as emblematic or spiritually significant to a group or individual.

Sports Mascots

Symbols, often in the form of characters or animals, used by sports teams to represent their identity, spirit, and values to fans.

Common-interest Associations

Organizations formed by individuals who unite to pursue shared goals or interests, ranging from hobby clubs to professional societies.