Question
A subsidiary made sales of inventory to its parent at a profit this year. The parent, in turn, sold all but 20 percent of the
A subsidiary made sales of inventory to its parent at a profit this year. The parent, in turn, sold all but 20 percent of the inventory to unaffiliated companies, recognizing a profit. The amount that should be reported as cost of goods sold in the consolidated income statement prepared for the year should be:
A. the amount reported as intercompany sales by the subsidiary.
B. the amount reported as intercompany sales by the subsidiary minus unrealized profit in the ending inventory of the parent.
C. the amount reported as cost of goods sold by the parent minus unrealized profit in the ending inventory of the parent.
D. the amount reported as cost of goods sold by the parent.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started