Which ONE of the following statements is FALSE? An unrealized profit or loss on intercompany inventory transfers is deferred on the parent's books to ensure that (1) the parent's net income equals the controlling interest in consolidated income and (2) the parent's retained earnings equal consolidated retained earnings. If two companies were separate and independent before a combination, no consolidation entry or adjustment is needed for the sale of inventory from one of the companies to the other company prior to the combination, even if the company still holds all or some of the inventory. The journal entry on the parent's books to defer unrealized gross profit on intercompany inventory transfers includes a debit to Investment in Subsidiary and a credit to Income from Subsidiary