_____ At 12/31/06, Pozak reported $80,000 of intercompany-acquired inventory in its balance sheet. This inventory was acquired in 2005-not 2006-from its 100%-owned subsidiary, Sozak. Sozak's cost was $60,000. Which of the following accounts is credited in consolidation at 12/31/06?

Question

Quizplus · Accepted Answer

In consolidation, the intercompany profit embedded in the unsold inventory must be eliminated. This is done by reducing the reported inventory value to its original cost to the consolidated entity. Therefore, Inventory is credited to adjust its value from $80,000 to $60,000, eliminating the $20,000 intercompany profit.

_____ at 12/31/06, Pozak Reported $80,000 of Intercompany-Acquired Inventory in Its