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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
- 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 FASBs guidance, the accountant must remove the inter-company profit from Company Ss net income. 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.
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