_____ in 2005, Palco Sold Inventory Costing $70,000 to Its

Multiple Choice

_____ In 2005, Palco sold inventory costing $70,000 to its 100%-owned subsidiary, Salco, for $110,000. At 12/31/05, $33,000 of this inventory was reported in Salco's balance sheet. In 2006, Salco resold this inventory for $55,000. How much intercompany profit was realized in 2006-not 2005?

A) $12,000
B) $21,000
C) $33,000
D) $34,000
E) None of the above.