During the current period, Ambrose Limited sold inventories to its parent entity at a profit of $12 000. The inventories cost Ambrose Limited $36 000. At balance sheet date the parent had sold 50% of the inventories to an external party. The consolidation adjustment entry (excluding tax effects) will eliminate unrealised profit amounting to:

A) $1 000.
B) $18 000.
C) $6 000.
D) $36 000.

Unrealised Profit

Unrealised profit refers to profits that have been generated on paper through an investment's increased value but have not yet been realized through a sale.

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials to be consumed in the production process.

External Party

An individual or organization that is separate from the entity being referred to and not directly involved in its operations or management.