What is the value of the intragroup profit

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Problem 1: An entity has a subsidiary that operates in a foreign country. The subsidiary sold goods to the Parent entity for €21 million. The functional Currency of the entity is the dollar. The cost of goods sold was €12 million. The goods were recorded by the entity at $10.5 million (€2 = $1) and were all unsold at the year-end of December 31, 2020. The closing exchange rate was €1.5. What is the value of the intragroup profit that will be eliminated at December 31, 2020?

Select one:

Option 1: $4,500,000
Option 2: $2,050,000
Option 3: $6,000,000
Option 4: $3,500,000

Reference no: EM132736465

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