When preparing the consolidated statements, which of the following statements is true with respect to intercompany debt and the corresponding interest?

options:

No eliminating entry is required for intercompany debt and the related interest since profit is not affected.

Only the debt receivable and payable are eliminated since the consolidated entity profit is not affected.

The intercompany interest expense and revenue, along with the deferred tax implications would need to be eliminated.

The intercompany debt asset and liability as well as the related interest revenue and expense should be eliminated since they have not occurred with parties outside the consolidated entity.