QUESTION 3 The primary reason intercompany transactions between entities within a consolidated group) should be properly accounted for is... a. to present consolidated financial statements as if the consolidated group is a single economic entity O b. to maximize consolidated net income. O c. to minimize consolidated taxable income. O d. because making [I] (intercompany) consolidating entries is just flat-out fun. QUESTION 4 On January 1, 2018, Sparrow, a wholly-owned subsidiary of Hawk (parent), sold 20 acres of land to Hawk for $300,000 cash. Sparrow recorded a gain of $285,000, given that they had acquired the land in 2009 for $15,000. Hawk had the acreage expertly appraised at December 31, 2018; the appraisal indicated the fair value is $360,000. On Hawk's December 31, 2018 consolidated balance sheet, the land should be reported at: O a. $360,000 O b. $300,000 O c. $75,000 (fair value of $360,000 less a deferred gain of $285,000) O d. $15,000 QUESTION 5 On October 31, 2018, Cub, a wholly-owned subsidiary of Grizzly (parent), sold inventory to Grizzly for a cash sales price of $120,000. Cub's inventory cost was $100,000. As of December 31, 2018, Grizzly still held all of the inventory they had acquired from Cub. In early 2019, Grizzly sold the inventory to an unaffiliated party for $120,000 (the same amount they paid Cub). The best description of the proper intercompany accounting for this transaction in Grizzly's 2018 consolidated financial statements would be... O a. eliminate the $120,000 sale and defer the $20,000 gross profit O b. eliminate the $120,000 sale, but recognize the $20,000 gross profit, because it was an upstream transaction O c. recognize the $120,000 sale and recognize the $20,000 gross profit, because the $120,000 intercompany sales price is substantially equivalent to a sale to an outside party (i.e., as-if an arm's-length transaction) d.recognize the $120,000 sale, but defer the $20,000 gross profit