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

question 8

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 of inventory must be eliminated from the consolidated balance sheet for 20X8?

• A)$2,400
• B)$9,000
• C)$12,000
• D)$3,000

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Definitions:

ATP Production

The biochemical process cells use to convert food into energy in the form of adenosine triphosphate (ATP).

Energy Storage Molecules

Compounds that cells use to store and release energy, such as ATP, fats, and carbohydrates.

Lipids

Lipids are a group of naturally occurring molecules that include fats, oils, waxes, and certain vitamins, characterized by their insolubility in water and role in storing energy and forming cell membranes.

Sugars

Simple carbohydrates that are a source of energy for the body, found naturally in foods or added as sweeteners.