Where an Investor Sells Inventory to an Associate and the Inventory

question 36

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 profit 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:

Dodd-Frank Wall Street Reform And Consumer Protection Act

A comprehensive piece of financial reform legislation passed in 2010 aimed at reducing risks in the American financial system, with a focus on consumer protection.

Inherent Authority

The power or authority possessed by an official body or official inherently through their position or role, not through external sources or assignments.

Proxy

A person who is authorized to vote the shares of another person. Also, the written authorization empowering a person to vote the shares of another person.

Ultra Vires

A Latin term meaning “beyond the powers”; in legal context, actions taken by a corporation or company officials that are beyond their legally granted corporate powers.