CH 5.2

In the presence of UPSTREAM intra-entity inventory transfers, from a consolidated view which of the following accounts becomes overstated in the year following the transfer?

The subsidiary's retained earnings

How do gross profits resulting from upstream inventory transfers affect the computation of consolidated net income attributable to the NCI?

- ending inventory gross profits decrease the nci share of consolidated net income - beginning inventory gross profits increace the nci share of consolidated net income

In the year of an intra-entity depreciable asset transfer at a price in excess of the asset's carrying amount, consolidation entries are needed to:

- remove the gain on sale from the intra-entity assets transfer - return the asset to its historical cost to the consolidated entity - remove the effect of the intra-entity gain on depreciation expense