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:

Modern Square

A method of representing the four types of categorical propositions and their logical relations in a visual diagram.

Opposition

A resistance or dissent, expressed in action or argument, against something or someone.

A Proposition

An expression of a belief or assessment that conveys a perspective, capable of being true or misleading.

Venn Diagram

A diagram that uses circles to represent sets and their relationships to each other through overlap and separation.