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year. b Use the following to answer questions 13-19: During 2001, Montana Corp., a 90-percent-owned subsidiary, sold inventory to its parent for $700,000; the inventory
year. b Use the following to answer questions 13-19: During 2001, Montana Corp., a 90-percent-owned subsidiary, sold inventory to its parent for $700,000; the inventory originally had cost Montana $500,000. By the end of 2001, only one- fourth of the inventory had been resold to unrelated parties. For 2001, the two companies reported the following: 2001 Operating income of parent company $ 900,000 2001 Net income of Montana Corp. 500,000 Total $1,400,000 13. Based on the information given above, what is the amount of the unrealized intercompany profit at the end of 2001? A) $200,000. B) $150,000. C $135,000. D) $ 50,000. 14. Consider the information given above. By what amount should inventory reported in the December 31, 2001, consolidated balance sheet exceed the inventory that would have been reported by the separate companies if there had been no intercompany transfer? A) $150,000 B) $135,000 C) $ 50,000 D) $ 0 15. Consider the information given above. By what amount should sales be adjusted in the 2001 consolidation workpaper as a result of the intercompany sale? A) No adjustment is necessary. B) $200,000 decrease. C) $700,000 increase. D) $700,000 decrease. d d
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