_____ Pazco Sold Inventory Costing $50,000 to Sazco, Its Foreign

Multiple Choice

_____ Pazco sold inventory costing $50,000 to Sazco, its foreign subsidiary, for $100,000. At year-end, Sazco reported in its balance sheet 60,000 LCUs of this inventory. At the time of the sale, $1 equalled 4 LCUs. At year-end, $1 equals 5 LCUs. How much intercompany profit must be deferred in the consolidated income statement at year-end, assuming that the LCU is the functional currency?

A) $6,000
B) $7,500
C) $30,000
D) $37,500
E) None of the above.