Kordel Inc. acquired 75% of the outstanding common stock of Raxston Corp. Raxston currently owes Kordel $500,000 for inventory a

Question

2 years ago

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Kordel Inc. acquired 75% of the outstanding common stock of Raxston Corp. Raxston currently owes Kordel $500,000 for inventory a

cquired over the past few months. In preparing consolidated financial statements, what amount of Raxston’s liability should be eliminated? Multiple Choice
a. $375,000.
b. $125,000.
c. $300,000.
d. $500,000.
e. $0.

Business

1 answer:

Nady [450] · Answer 1 · 2022-04-20T14:53:56+03:00

Answer:

what amount of Raxston’s liability should be eliminated? d.$500,000

Explanation:

At different levels of the consolidation, certain intercompany payables and receivables balances must be eliminated. Eliminations are only required in the context of a consolidation where the trading parties are both included in a given consolidation.