Consolidated financial statements are being prepared for Behemoth Corporation and its two wholly-owned subsidiaries that have intercompany loans of $50,000 and intercompany profits of $100,000.How much of these intercompany loans and profits should be eliminated?
A)intercompany loans − $0;intercompany profits − $0
B)intercompany loans − $50,000;intercompany profits − $0
C)intercompany loans − $50,000;intercompany profits − $100,000
D)intercompany loans − $0;intercompany profits − $100,000

Question

Quizplus · Accepted Answer

In consolidated financial statements, all intercompany transactions, including loans and profits, must be eliminated to avoid double counting and present a true picture of the financial status of the entire corporate entity.

Consolidated Financial Statements Are Being Prepared for Behemoth Corporation and Its