Angelo Limited sold inventory to its parent entity at a profit of $4 000.The inventory cost Angelo Limited $16 000.At balance sheet date the parent had sold 50% of the inventory to an external party.The consolidation adjustment entry (excluding tax effects)will eliminate unrealised profit amounting to:

Question

Quizplus · Accepted Answer

The unrealized profit on the inventory still held by the parent is $2,000, which is 50% of the total profit of $4,000.

Angelo Limited Sold Inventory to Its Parent Entity at a Profit