A wholly-owned subsidiary provided services to its parent during the current year, at a cost of $120,000. The subsidiary charged the parent $200,000 for the services. On the year's consolidated income statement, what should be reported with respect to this information?

Question

Quizplus · Accepted Answer

In a consolidated income statement, intercompany transactions are eliminated. Therefore, only the service expense of $120,000 incurred by the subsidiary should be considered, as the revenue and expense cancel each other out.

A Wholly-Owned Subsidiary Provided Services to Its Parent During the Current