A Subsidiary Entity Sold Goods to Its Parent Entity for $100

question 24

Multiple Choice

A subsidiary entity sold goods to its parent entity for $100 000.The inventory originally cost the subsidiary $125 000.At reporting date,the parent still held all of the inventory.Which of the following adjustments must be included as part of the consolidation entry to eliminate this transaction?

• A)Cr Inventory $100 000
• B)Cr Inventory $125 000
• C)Dr Inventory $25 000
• D)Dr Inventory $225 000

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Definitions:

Cost Centers

Parts of an organization where costs are accumulated for internal accounting purposes but do not directly generate revenue.

Flexible Budget Data

Financial information that adjusts based on changes in activity levels, often used for performance evaluation.

Profit Center

A branch or division of a company that is treated as a separate unit for the purpose of assessing its profitability.

Responsibility Report

Financial reports that track the performance of segments, departments, or managers within an organization against their budgeted or forecasted figures.