Walsh Company Sells Inventory to Its Subsidiary, Fisher Company, at a Profit

question 80

Multiple Choice

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2020. With respect to one-third of the inventory sold to Fisher, Walsh accounts for it using the equity method of accounting.In the consolidation worksheet for 2020, which of the following accounts would be debited to eliminate unrecognized intra-entity gross profit with regard to the 2020 intra-entity transfers?

• A) Retained earnings.
• B) Cost of goods sold.
• C) Inventory.
• D) Investment in Fisher Company.
• E) Sales.

---

Definitions:

Turgor Pressure

The pressure of water inside plant cells against the cell wall, which contributes to the stiffness of plant tissues and is essential for plant stability and nutrient uptake.

Pollinators

Animals that facilitate plant reproduction by transferring pollen from the male structures of a plant to the female structures of another, enabling fertilization.

Reproductive Success

The passing of genes onto the next generation in a way that they can too reproduce effectively; a core concept of evolutionary biology.

Ultimate Level

In biology, it refers to the fundamental reasons for traits or behaviors from an evolutionary perspective, often involving fitness and survival.