Consolidated Financial Statements Are Being Prepared for Behemoth Corporation and Its

question 3

Multiple Choice

Consolidated financial statements are being prepared for Behemoth Corporation and its two wholly-owned subsidiaries that have intercompany loans of $50,000 and intercompany profits of $100,000.How much of these intercompany loans and profits should be eliminated?

• A)intercompany loans − $0;intercompany profits − $0
• B)intercompany loans − $50,000;intercompany profits − $0
• C)intercompany loans − $50,000;intercompany profits − $100,000
• D)intercompany loans − $0;intercompany profits − $100,000

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Definitions:

Economic Depression

A prolonged period of significant decline in economic activity across an economy, characterized by high unemployment rates, low output, and a contraction in spending and investment.

Mixed Economy

An economic system blending elements of market, command, and traditional economies, featuring both private and public ownership of resources.

Public Enterprises

Government-owned organizations that operate in the commercial sector, intending to provide public services or generate revenue.