Where an investor sells inventories to an associate and the inventories are still on hand at the end of the year the investors share of the associates profits is:

increased by the investors share of the unrealised profit.

not affected as unrealised profits are only considered to arise in a parent-subsidiary relationship.

not affected as the unrealised profit is in the books of the investor, not the associate.

decreased by the investors share of the unrealised profit.

please explain why thanks