The Following Information Pertains to Questions

question 30

Multiple Choice

The following information pertains to questions
X Inc.owns 80% of Y Inc.During 2009,X Inc sold inventory to Y for $10,000.Half of this inventory remained in Y's warehouse at year end.Half of this inventory remained in Y's warehouse at year end.Also during 2009,Y Inc sold Inventory to X Inc.for $5,000.40% of this inventory remained in X's warehouse at year end.Both companies are subject to a tax rate of 50%.The gross profit percentage on sales is 20% for both companies.Unless otherwise stated,assume X Inc.uses the cost method to account for its Investment in Y.Inc.
-Assuming that X Inc.used the equity method,what adjustment would have to be made to the investment in Y account to adjust for any unrealized profits on Y's sales to X?

• A)No adjustment would be required.
• B)The account would have to be reduced by $400.
• C)The account would have to be reduced by $160.
• D)The account would have to be reduced by $200.

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Definitions:

Proton NMR

A type of nuclear magnetic resonance spectroscopy that specifically studies the magnetic properties of hydrogen-1 isotopes in molecules to infer structure.

Chemical Shift

In NMR spectroscopy, the variation in the resonance frequency of a nucleus due to the electronic environment, providing insights into molecular structure.

Organic Product

A compound or substance that has been synthesized from carbon-based molecules, often found in agricultural, cosmetic, or pharmaceutical contexts.

Reaction Sequence

A sequence of chemical processes in which the output of one reaction serves as the input for the subsequent one.