How does the timing of the deferral and recognition

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Reference no: EM133474118

Case: "In the preparation of consolidated financial statements, intra-entity balances and transactions shall be eliminated. This includes intra-entity open account balances, security holdings, sales and purchases, interest, dividends, and so forth. As consolidated financial statements are based on the assumption that they represent the financial position and operating results of a single economic entity, such statements shall not include gain or loss transactions among the entities in the consolidated group. Accordingly, any intra-entity profit or loss on assets remaining within the consolidated group shall be eliminated."

Problem #1 - Is the sale from the parent to the subsidiary called an upstream sale?

After this type of transaction occurs discuss an issue that arises we must address during the consolidation process.

Problem #2 How does the timing of the deferral and recognition of profit differ between sales of inventories and sales of land and depreciable assets?

Problem #3
In your own words describe the purpose of the (ADJ) consolidation entry when the parent company applies the cost method of pre-consolidation bookkeeping.

Reference no: EM133474118

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