Where an Investor Sells Inventory to an Associate and the Inventory

question 2

Multiple Choice

Where an investor sells inventory to an associate and the inventory is still on hand at the end of the year the investor's share of the associate's profits is:

• A)not affected as unrealised profits are only considered to arise in a parent-subsidiary relationship;
• B)not affected as the unrealised profit is in the books of the investor,not the associate;
• C)increased by the investor's share of the unrealised profit;
• D)decreased by the investor's share of the unrealised profit.

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Definitions:

Legitimate Power

Power derived from a formal position or role within an organization, giving the holder authority to make decisions and demand compliance.

Coercive Power

the ability of a person to influence others' behavior by threat of punishment or actual punishment.

Expert Power

is the influence one possesses due to their skills, knowledge, or expertise in a particular area, which others recognize and value.

Distinct Source

A unique origin from which information, data, or materials are obtained.