During the Current Period, a Subsidiary Entity Sold Inventories to Its

question 25

Multiple Choice

During the current period, a subsidiary entity sold inventories to its parent entity at a profit of $8 000. The goods had originally cost the subsidiary $20 000. At the end of the year all the inventories were still on hand. The adjustment entry to deal with this transaction on consolidation would include the following line item:

• A) Cr Cost of sales $28 000.
• B) Cr Cost of sales $20 000.
• C) Cr Cost of sales $12 000.
• D) Cr Cost of sales $8 000.

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Definitions:

Proposed Mergers

Suggested or planned combinations of two or more companies, aiming to enhance market share, reduce costs, or improve competitiveness.

HHI

Herfindahl-Hirschman Index, a measure of market concentration used to evaluate the potential for anti-competitive behavior in mergers and acquisitions.

Concentrated

A market structure described by a small number of firms holding a large market share, which can lead to reduced competition.

HHI

The Herfindahl-Hirschman Index, a measure of market concentration used to determine the competitiveness of an industry.