4. Sun Corporation, a 90 percent–owned subsidiary of Pam Corporation, buys half of its raw materials from Pam. The transfer price is exactly the same price as Sun pays to buy identical raw materials from outside suppliers and the same price as Pam sells the materials to unrelated customers. In preparing consolidated statements for Pam Corporation and Subsidiary:

a The intercompany transactions can be ignored because the transfer price represents arm’s-length bargaining b Any unrealized profit from intercompany sales remaining in Pam’s ending inventory must be offset against the unrealized profit in Pam’s beginning inventory c Any unrealized profit on the intercompany transactions in Sun’s ending inventory is eliminated in its entirety d Only 90 percent of any unrealized profit on the intercompany transactions in Sun’s ending inventory is eliminated