What would be the impact on Year consolidated net income

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Question - Pen Company acquired 70 percent of the common shares of Sen Company in January 2019. During 2020, Pen sold inventory to Sen for $100,000 and earned a gross margin of 30 percent. At the end of Year 2020, Sen still had the goods purchased from Pen in its inventory. Both companies turn over their inventory at least five times a year.

What would be the impact on Year 2020 consolidated net income attributable to the shareholders of Pen if the intercompany sale had been by Sen to Pen rather than by Pen to Sen?

a. The impact cannot be determined based on the information provided.

b. It would decrease.

c. It would not change.

d. It would increase.

Reference no: EM133188214

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