QUESTION 19 Parkin Industries, a U.S. company, acquired a wholly-owned subsidiary, located in Italy, at the beginning of the current year, for 200,000. The subsidiary's functional currency is the euro. The balance sheet of the subsidiary at the date of acquisition was as follows: Assets Current assets Plant and equipment, net Total assets Liabilities and Equity Liabilities Capital stock Retained earnings 50,000 200,000 250,000 160,000 20,000 Total liabilities and equity 70,000 250,000 Appropriate revaluations of the subsidiary's assets at the date of acquisition are as follows: Inventories are undervalued by 1,000. The subsidiary sold the inventory during the current year. Equipment is undervalued by 15,000. The equipment has a 10-year remaining life, straight-line. Identifiable indefinite life intangible assets, previously unreported, have a fair value of 40,000. During the current year, there was no impairment of either identifiable intangible assets or goodwill. The exchange rate at the beginning of the year was $1.20/. The average rate for the year was $1.22/, and the rate at the end of the year was $1.25/. At the end of the year, consolidation eliminating entry (O) has what effect on consolidated other comprehensive income? A. $85 gain O B. $125 loss C. No effect O D. $75 loss On January 1, 2017, a subsidiary sold equipment to its parent for $520,000. The subsidiary's original cost was $200,000 and as of January 1, 2017, $20,000 in depreciation had been recorded on the subsidiary's books. At the date of sale, the equipment had a 10-year remaining life, straight-line. It is now December 31, 2021 (5 years since the sale), and the parent still holds the equipment. In the consolidation eliminating entries for 2021, the accumulated depreciation account is reduced by a net amount of O A. $130,000 B. $160,000 O C. $170,000 D. $150,000 A subsidiary sells merchandise to its parent at a markup of 25% on cost. In the current year, the parent had $75,000 in merchandise purchased from the subsidiary in its beginning inventory. During the current year, the parent paid $750,000 for merchandise from the subsidiary. By year-end, the parent has sold $700,000 of merchandise purchased from the subsidiary to outside customers for $900,000. What is consolidated sales revenue for the year? A. $1,650,000 OB. $1,500,000 OC. $ 750,000 O D. $ 900,000