Answer the following questions:

- The effect of unrealized profits and losses on sales between affiliated companies is eliminated in preparing consolidated financial statements. When are profits and losses on such sales realized for consolidated statement purposes?

- What effect does the elimination of intercompany sales and cost of goods sold have on consolidated net income?

- Would failure to eliminate unrealized profit in inventories at December 31, 2016, have any effect on consolidated net income in 2017? 2018?