The material sale of inventory items by a parent company to an affiliated company a. Affects consolidated net income under a periodic inventory system but not under a perpetual inventory system. b. Enters the consolidated revenue computation only if the transfer was the result of arm’s length bargaining c. Does not result in consolidated income until the merchandise is sold to outside parties. d. Does not require a working paper adjustment if the merchandise was transferred at cost.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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The material sale of inventory items by a parent company to an affiliated company

a. Affects consolidated net income under a periodic inventory system but not under a perpetual inventory system.

b. Enters the consolidated revenue computation only if the transfer was the result of arm’s length bargaining

c. Does not result in consolidated income until the merchandise is sold to outside parties.

d. Does not require a working paper adjustment if the merchandise was transferred at cost.

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