What is the net effect on net income as a result of consolidating adjustments made in 2017 with respect to the equipment transfer?
A) Increase net income by $2,000.
B) Decrease net income by $12,000.
C) Decrease net income by $10,000.
D) Decrease net income by $14,000.
E) Increase net income by $10,000.

Question

Quizplus · Accepted Answer

The transfer of equipment requires elimination of intercompany sales, which decreases revenue by $80,000, and expenses by $70,000. This results in a decrease of $10,000 in net income.

What Is the Net Effect on Net Income as a Result