A parent has a wholly-owned subsidiary. At the end of the year, the subsidiary's ending inventory includes $50,000 in unconfirmed profit on merchandise purchased from the parent. The subsidiary's beginning inventory included unconfirmed profit of $45,000 on merchandise purchased from the parent. The parent's ending inventory includes $80,000 in unconfirmed profit on merchandise purchased from the subsidiary. The parent's beginning inventory included $110,000 in unconfirmed profit on merchandise purchased from the subsidiary.

What is the effect of the above information on the parent's equity in the net income of the subsidiary for the year, assuming the parent uses the complete equity method?

Select one:

A. Decrease of $25,000

B. Increase of $25,000

C. Decrease of $30,000

D. Increase of $5,000

Answer rating: 100% (QA)

the parents equity in net income of the subsidiary for the year 25000 Option B Is the correct answe... View the full answer