Discussion Post: "Consolidated Financial Statements- Intra-Entity Asset Transactions"
a) The consolidation process required for the intra-entity transfer of depreciable assets is different from the requirements for inventory and land. Analyze the current consolidation process for intra-entity transfer of depreciable assets and suggest at least one improvement to the process. Provide an example to support your recommendation.
b) Assume that company P (parent) uses the equity method to account for its investment in company S (subsidiary). Company P purchases inventory items from company S. According to FASB's guidance, the accountant must remove the inter-company profit from Company S's net income. Evaluate the consolidation process for inventory transfers between the parent and subsidiary and describe the process for eliminating profit from the non-controlling interest. Determine if the process permanently eliminates the profit from the non-controlling interest or merely shifts the profit from one period to the next. Provide support for your rationale.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.