1. The following intercompany transactions occurred during t
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Get it written →1. The following intercompany transactions occurred during the year:Parent loaned $12500 to Sub. To keep things simple, assume that there is no interest revenue or interest expense associated with this loan.Parent made a sale to Sub for $13000 cash. The inventory had originally cost Parent $12220. Sub then sold that same inventory to an outsider for $14000.Parent made a sale to Sub for $15000 cash. The inventory had originally cost Parent $11280. Sub has not yet sold that same inventory to an outsider. (Don’t forget equity method entry!)Based on our “conceptual discussion,” what consolidation worksheet entries would you make?2. Give two examples of Arm’s Length Transactions and Three Examples of Non Arm’s Length Transactions.3. Find the indirect exchange rates on the two dates and show the impact of changes in exchange rates on Imports and Exports.January, 2010January 2011Direct Exchange Rate (SAR/$)SAR 3.75SAR 3.50
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