CAQ is a company with several subsidiaries. CAQ also owns 30% of the ordinary share capital of DBC and has significant influence over it. All companies operate in C-land where the currency is the C$. During the year ended 31 December 20X6, DBC sold goods with a sales value of C$2.5 million to CAQ. Three quarters of these goods remained in CAQ's inventories at the year end. DBC makes a 20% gross margin on all sales. What is the reduction in inventories required to eliminate the unrealised profit in the consolidated financial statements of CAQ? Solution A.C$112,500 B.C$150,000 C.C$375,000 D.C$500,000