Reference no: EM132708538

Question - Parent Corporation owns 90 percent of Subsidiary 1 Company's stock and 75 percent of Subsidiary 2 Company's stock. During 20X8, Parent sold inventory purchased in 20X7 for $48,000 to Subsidiary 1 for $60,000. Subsidiary 1 then sold the inventory at its cost of $60,000 to Subsidiary 2. Prior to December 31, 20X8, Subsidiary 2 sold $45,000 of inventory to a nonaffiliate for $67,000 and held $15,000 in inventory at December 31, 20X8.

1) Based on the information given above, what amount should be reported in the 20X8 consolidated income statement as cost of goods sold?

A) $36,000

B) $12,000

C) $48,000

D) $45,000

2) Based on the information given above, what amount should be reported in the December 31, 20X8, consolidated balance sheet as inventory?

A) $36,000

B) $12,000

C) $15,000

D) $28,000

3) Based on the information given above, what amount of cost of goods sold must be eliminated from the consolidated income statement for 20X8?

A) $117,000

B) $120,000

C) $150,000

D) $128,000

4) Based on the information given above, what amount of sales must be eliminated from the consolidated income statement for 20X8?

A) $117,000

B) $120,000

C) $150,000

D) $128,000

5) Based on the information given above, what amount of inventory must be eliminated from the consolidated balance sheet for 20X8?

A) $2,400

B) $9,000

C) $12,000

D) $3,000