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

question 22

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 2012, which of the following choices would be a debit 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:

Echoic Memory

The sensory register that briefly holds mental representations of auditory stimuli.

Sensory Register

The part of the memory system that processes sensory information from the environment, holding it for a very short period.

Saccadic Eye Movements

Rapid, ballistic movements of the eyes that abruptly change the point of fixation from one location to another.

Visual Sensations

Experiences derived from the stimulation of the eye's photoreceptors by light, leading to the perception of sight.