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A parent company sells inventory costing $115,000 at a mark-up of 13% to a wholly owned subsidiary. At the end of the reporting period half of this inventory remains unsold. Which one of the following is the required consolidation adjustment? A. No adjustment is needed because intra-group trading cancels on consolidation. B. Increase group inventory by $57,500 as half of the inventory remains unsold. C. Reduce group inventory by $115,000 as the sale was not made to a third party. D. Reduce group inventory by $7,475 and reduce group profits by $7,475 to eliminate the unrealised profit in inventory. |