Question 2 You have a peer graded assignment in Advanced Accounting course where students are required to review and grade each other assignments. You are to review your colleague Khalid's paper. The following information is provided by Khalid 1-Intra-entity transactions involving transfer of inventory between affiliated companies in a business combination can be downstream or upstream. In these transactions, inventories can be transferred at historical cost or at a markup The gross profit resulting from such transfer are immediately realized in the year of the transfer 2-A downstream transfer involves sale of inventory by the parent company to its subsidiary. If the subsidiary is 100% owned all the resultant gross profit is solely related to the parent company. However, if the subsidiary is partially owned the gross profit would be allocated between the parent company and the noncontrolling interest in proportion of their ownership interest. 3-Consolidated financial statements are prepared to provide one set of financial statements reflecting the parent and subsidiary as one single economic entity. As such any intra-entity transactions are eliminated. Intra-entity transfer of inventory is an internal transaction that requires the removal of intra- entity sales and purchases in the process whether the transfer is downstream or upstream. However, if the transfer is downstream and the subsidiary is partially owned, the parent as the seller recognizes all the resultant gross profit, irrespective of any inventory on hand at year end, immediately in the year of transfer. 4-If a portion of the intra-entity transfer remains in ending inventory in any year, gross profit in that inventory is subtracted from consolidated cost of goods sold. Required: Identify any wrong information provided by Khalid in each of the above paragraphs and give the right information. For the toolbar, press ALT+F10 (PC) or ALT+FN+10 (Mac