question archive When a parent and its subsidiary use a periodic inventory system rather than a perpetual system, the income and asset balances reported in the consolidated financial statements are: affected only if there are upstream intercompany sales of inventory
When a parent and its subsidiary use a periodic inventory system rather than a perpetual system, the income and asset balances reported in the consolidated financial statements are: affected only if there are upstream intercompany sales of inventory
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When a parent and its subsidiary use a periodic inventory system rather than a perpetual system, the income and asset balances reported in the consolidated financial statements are:
-
- affected only if there are upstream intercompany sales of inventory.
- affected only if there are downstream intercompany sales of inventory.
- I
- II
- Both I and II
- Neither I nor II
When a parent and its subsidiary use a periodic inventory system rather than a perpetual system, the income and asset balances reported in the consolidated financial statements are:
-
- affected only if there are upstream intercompany sales of inventory.
- affected only if there are downstream intercompany sales of inventory.
- I
- II
- Both I and II
- Neither I nor II
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Answer:
D .
explanation
Any sale of inventory from the parent company to subsidiary or from subsidiary to the parent company, will not influence consolidated financial statements, in which the assets, liabilities, equity, income, and cash flows of the parent company and its subsidiaries are presented as a single economic entity, due to the periodic inventory system.
