The sale of inventory from a parent to its subsidiary 1- The consolidated profit is calculated if the transfer was the result of a negotiation. 2-It affects the consolidated net income under the periodic inventory, but not under the perpetual one. 3- It does not generate consolidated income until it is sold to a third party. 4- It does not require an adjustment in the worksheets. Eastmall owns all of the voting shares in Northmall. On January 1, 2019, Eastmall sold machinery to Northmall for its book value of $ 24,000. Eastmall had the machinery for three years and used the straight-line method of depreciation with no residual value. Northmall will use a straight-line assuming the machinery has a 5-year useful life with no residual value. In the 2019 consolidated financial statements, depreciation expense 1- No adjustment required 2-Decreases by $ 4,800 3- Increases by $ 4,800 4- Increases by $ 8,000