_____ (Module 2) Pageco Sold Inventory to Its 100%-Owned Subsidiary

Short Answer

_____ (Module 2) Pageco sold inventory to its 100%-owned subsidiary, Sageco, in 2005 and 2006. At 12/31/05, $24,000 of intercompany profit was deferred in consolidation using the partial equity method. The related inventory was resold to an outside party in early 2006. At 12/31/06, $25,000 of intercompany profit was deferred in consolidation using the partial equity method. At 12/31/06,
a. Consolidated net income is $25,000 less than the parent's net income.
b. Consolidated net income is $25,000 more than the parent's net income.
c. Consolidated net income is $1,000 less than the parent's net income.
d. Consolidated net income is $1,000 more than the parent's net income.