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

a The intercompany transactions can be ignored because the transfer price represents arms-length bargaining

b Any unrealized profit from intercompany sales remaining in Pans ending inventory must be offset against the unrealized profit in Pans beginning inventory

c Any unrealized profit on the intercompany transactions in Sars ending inventory is eliminated in its entirety

d Only 90 percent of any unrealized profit on the intercompany transactions in Sars ending inventory is eliminated