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:

Kaibab Squirrels

A species of squirrel that is native to the North Rim of the Grand Canyon in the United States, known for its distinctive tufted ears.

Abert Squirrels

A species of tree squirrel named for Colonel John James Abert, noted for their distinctive ear tufts and dependence on ponderosa pine trees for habitat and food.

Prezygotic Barriers

Reproductive isolating mechanisms that occur before the fertilization of the egg, such as geographical, temporal, or behavioral differences that prevent species from mating.

Ecological Barriers

Physical, chemical, or biological factors in the environment that prevent species from dispersing to certain areas, limiting their distribution.