Parent Corporation Owns 90 Percent of Subsidiary 1 Company's Stock

question 35

Multiple Choice

Parent Corporation owns 90 percent of Subsidiary 1 Company's stock and 75 percent of Subsidiary 2 Company's stock.During 20X8,Parent sold inventory purchased in 20X7 for $48,000 to Subsidiary 1 for $60,000.Subsidiary 1 then sold the inventory at its cost of $60,000 to Subsidiary 2.Prior to December 31,20X8,Subsidiary 2 sold $45,000 of inventory to a nonaffiliate for $67,000 and held $15,000 in inventory at December 31,20X8.
-Based on the information given above,what amount should be reported in the 20X8 consolidated income statement as cost of goods sold?

• A)$36,000
• B)$12,000
• C)$48,000
• D)$45,000

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Definitions:

Maladaptive Behaviours

Actions or tendencies that are counterproductive to an individual's well-being or adjustment to their environment, often hindering functioning and success.

Defensive Manoeuvres

Strategies employed, often unconsciously, to protect the ego from anxiety and to maintain self-esteem.

Transference

In psychoanalytic theory, the redirection of feelings and desires originally experienced in childhood towards a new object, often observed in psychotherapy.

Regression

Regression is a defense mechanism leading individuals to return to an earlier stage of development when faced with stress or psychological conflict.