A Newly Created Subsidiary Sold All of Its Inventory to Its

Multiple Choice

A newly created subsidiary sold all of its inventory to its parent at a profit in its first year of existence.The parent,in turn,sold all but 20 percent of the inventory to unaffiliated companies,recognizing a profit.The parent had no other sales during the year.The amount that should be reported as cost of goods sold in this year's consolidated income statement should be:

A) 80 percent of the amount reported as intercompany sales by the subsidiary.
B) 80 percent of the amount reported as cost of goods sold by the subsidiary.
C) the amount reported as cost of goods sold by the parent minus unrealized profit in the ending inventory of the parent.
D) 80 percent of the amount reported as cost of goods sold by the parent.