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

question 92

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 2011, 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:

Objective

A specific goal or aim that is intended to be achieved, often measurable and time-specific.

Voluntary Consent

A term used to describe an individual's freely given agreement or permission, free from any form of duress or coercion.

Important Fact

A piece of information that is crucial or significant in context, influencing decisions or outcomes.

Mistakes Of Value

Errors made in transactions based on incorrect assessments of the value of goods, services, or property.