Advanced Accounting exam 2 100% solved

Advanced Accounting exam 2 100% solved How much intercompany inventory profit should be eliminated from ending inventory in the consolidation process? a) Net profit on total inter-company sales during the year b) Gross profit on total inter-company sales during the year c) Gross profit on goods sold to outside parties during the year d) Gross profit on goods remaining in buyer's inventory at year end - ANSWERd) Gross profit on goods remaining in buyer's inventory at year end What is the purpose of the consolidation entry regarding the intercompany sale of land? a) To make consolidated net income the same as it would have been had the sale not occurred b) To make consolidated net income less than it would have been had the sale not occurred c) To make consolidated net income greater than it would have been had the sale not occurred d) To adjust the Land account with no effect on consolidated net income - ANSWERa)To make consolidated net income the same as it would have been had the sale not occurred In the years after a seller makes an intercompany sale of equipment at a gain, equity investment is increased in the consolidation entries. Why does the amount of the equity investment adjustment change from year to year? a) Because the Equipment account balance is reduced with passage of time b) Because a portion of the gain is realized in the consolidated financial statement each year c) Because Accumulated Depreciation and Equipment are reduced by different amount each year - ANSWERb) Because a portion of the gain is realized in the consolidated financial statement each