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19. A parent owns 80% of its subsidiary and...

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Question

Accounting

19.

A parent owns 80% of its subsidiary and sells merchandise to its subsidiary at a 25% markup on cost. The subsidiary's ending inventory includes $825,000 purchased from the parent. The subsidiary's beginning inventory includes $750,000 purchased from the parent.

What is the effect of the above on the parent's equity in net income of the subsidiary for the current year?

A)

$15,000 decrease

B)

$12,000 increase

C)

$12,000 decrease

D)

No effect

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