Multiple Choice
Wagner Ltd owns 100% of Korngold Ltd.For the year ended 30 April 20X1, Korngold Ltd reported a profit of $1 million.On 30 April 20X0, Korngold Ltd had sold inventory to Wagner Ltd for a $0.6 million profit.All of this inventory was sold by Wagner Ltd on 1 June 20X0.For the financial year ending 30 April 20X0, what is the effect of consolidation adjustment (if any) in the profit or loss statement, as a result of the profit on this sale?
A) None, because all inventory was unsold
B) Reduce group profit by $400 000
C) Reduce group profit by $600 000
D) Increase group profit by $600 000
Correct Answer:
Verified
Correct Answer:
Verified
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