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

question 42

Multiple Choice

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2012. One-third of the inventory is sold by Walsh uses the equity method to account for its investment in Fisher.
In the consolidation worksheet for 2013, which of the following choices would be a credit entry to eliminate unrealized intra-entity gross profit with regard to the 2012 intra-entity sales?

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

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Definitions:

Evolutionary Pressures

Forces in the environment that influence the survival and reproduction of species, guiding the process of natural selection.

Downward Social Comparison

Comparing oneself to others who are perceived as less fortunate or less successful, often to boost self-esteem or subjective well-being.

Distressful Events

Incidents or situations that cause extreme anxiety, sorrow, or pain, potentially leading to significant psychological or physical impact.

Affiliation

The connection or association with a group, organization, or cause, often determined by shared interests, goals, or identities.