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

question 43

Multiple Choice

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2010. 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 2010, which of the following choices would be a credit entry to eliminate unrealized intra-entity gross profit with regard to the 2010 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:

Inches

A unit of length in the imperial and U.S. customary measurement systems, equal to 1/12th of a foot or 2.54 centimeters.

Newborn

A baby from birth to about 2 months of age, during which rapid physical and cognitive development occurs.

Low Birth Weight

Refers to a newborn weighing less than 2,500 grams (5 pounds, 8 ounces) at birth, which may indicate health issues or risks.

Respiratory Distress Syndrome

A serious condition affecting newborns causing breathing difficulties due to underdeveloped lungs and lack of a surfactant.