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

Question

Quizplus · Accepted Answer

The unrealised profit on the remaining inventory held by the parent is $2,000, which is 50% of the $4,000 profit since half of the inventory was sold to an external party.

During the Current Period, Angelo Limited Sold Inventories to Its