During year 7, Brother company sold inventory, which cost it $8,000, to its subs
ID: 2477211 • Letter: D
Question
During year 7, Brother company sold inventory, which cost it $8,000, to its subsidiary, sister company, for $12,000. At the end of year 7, sister had $6,000 of the intercompany goods still on its books. The balance had been resold to the intercompany unaffiliated customers for $12,000. Which one of the following is the amount of ending inventory that should be eliminated for consolidated statements? $8,000 $6,000 $4,000 $12,000 During year 7, Brother company sold inventory, which cost it $8,000, to its subsidiary, sister company, for $12,000. At the end of year 7, sister had $6,000 of the intercompany goods still on its books. The balance had been resold to the intercompany customers for $12,000. Which one of the following is the amount of intercom pany sales that should be eliminated for 200X consolidated statements? $18,000 $27,000 $12,000 $24,000 For consolidated purpose, what effects will be intercompany sale of fixed asset at a profit or at aloss have on depreciation expense recognized by the buying affiliate? At a profit At a loss Overstate Understate Overstate Overstate Understate Understate Scroll, Inc., a wholly owned subsidiary of pirn, inc., began operations on january 1, year 5. The following information is from the condensed year 5 income statements of pirn and scroll:Explanation / Answer
12- C- $4000
Sale value =12000 and Cost to Brother Company= 8000
Profit Ratio on Sales =(4000/12000)*100= 33.333%
Inventory held by sister on balance sheet date =$6000 including profit of Brother.
Cost of Inventory held = $6000*(1-.3333) =$4000
$4000 SHOULD BE Eleminated from Inventory of both company for Consolidation purpose and Unrealized profit of $2000 shall be eliminated from profit of Brother and Inventory of Sister company.
13- C- $12000
Amount OF Sale $12000 shall be adjusted from sale of Brother company and from Purchase of Sister company.
14- A- Overstate and Understate.
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