| After studying this chapter, you should be able to: | |
| LO1 | Understand why intra-entity asset transfers create accounting effects within the financial records of affiliated companies that must be eliminated or adjusted in preparing consolidated financial statements. |
| LO2 | Understand that when companies affiliated through common control engage in intra-entity inventory transfers, consolidation procedures are required to eliminate sales and purchases balances. |
| LO3 | Understand why consolidated entities defer intra-entity gross profit in ending inventory and the consolidation procedures required to recognize profits when actually earned. |
| LO4 | Understand that the consolidation process for inventory transfers is designed to defer the unrealized portion of an intra-entity gross profit from the year of transfer into the year of disposal or consumption. |
| LO5 | Understand the difference between upstream and downstream intra-entity transfers and how each affects the computation of noncontrolling interest balances. |
| LO6 | Prepare the consolidation entry to remove any unrealized gain created by the intra-entity transfer of land from the accounting records of the year of transfer and subsequent years. |
| LO7 | Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities. |