PLEASE ANSWER EVERY MCQ CORRECTLY.

1. What should the amount for consolidated inventory on the balance sheet reflect?

Multiple Choice

a) The cost as reported by the first entity that bought the merchandise.

b) The profit made by all the associated companies for sales they have made to third parties.

c) The selling price as recorded by the last entity that bought the merchandise.

2. When are profits from intercompany land sales realized?

Multiple Choice

a) They are realized when an agreement is signed with respect to ownership of the land.

b) They are realized when consideration has been received for the land.

c) They are realized only when sold to outsiders.

3. Which of the following statements best describes the required accounting treatment with respect to income taxes on unrealized intercompany profits?

Multiple Choice

a) They would be charged to retained earnings during the preparation of financial statements.

b) The income tax will be expensed when the profit is realized in accordance with the matching principle.

c) These taxes can be ignored since an increase in income tax expense for one company is offset by an equivalent reduction in income tax expense for the other.

4. What is the fundamental basis and reasoning of unrealized profit in ending (and/or beginning) inventory?

Multiple Choice

a) It is an issue of timing when the consolidated entity, rather than the individual entity, earns the profit.

b) It is an issue of transfer pricing the individual entities must pass merchandise on at its original price with no mark-up or markdown.

c) It is an issue of materiality the individual entities in the consolidated entity cannot record sales to each other.

5. Consolidated net income is ________ regardless of whether the transactions were upstream (subsidiary selling) or downstream (parent selling).

Multiple Choice

a) the same

b) different

c) indeterminable

6. When determining consolidated inventory on the consolidated balance sheet, which of the following consolidation adjustments would be required?

Multiple Choice

a) Intercompany sales/purchases

b) Unrealized profits in the ending inventory

c) Realized profits in the ending inventor