You have a peer graded assignment in Advanced Accounting course where students are required to review and grade each other's assignment. You are to review your colleague Khalid's paper. The following information is provided by Khalid: - Intra-entity transactions involving transfer of inventory between affiliated companies in a business combination can be downstream or upstream. In these transactions inventories can be transferred at historical cost or at a markup. The intra-entity sales are eliminated in the year of the transfer while the related cost of goods sold is eliminated when the goods are sold to outsiders. 2-An upstream transfer involves sale of inventory by the subsidiary to the parent company. If the subsidiary is partially owned the noncontrolling interest share in the gross profit in ending inventory must be deferred to the year of sale of the inventory to outsiders, on the other hand, the parent company's share of the gross profit is recognized in the year of the transfer because the parent has a controlling interest in the subsidiary. 3-Consolidated financial statements are prepared to provide one set of financial statements reflecting the parent and subsidiary as one single economic entity. As such any intra-entity transactions are eliminated. Intra-entity transfer of inventory is an internal transaction as a result sales and cost of goods sold are removed in the process whether the transfer is downstream or upstream. However, if the transfer is upstream and the subsidiary is partially owned because the subsidiary is the seller and noncontrolling interests hold the minority of ownership, intra-entity sales and purchase are eliminated only to the extent of the noncontrolling interest ownership in the year of the transfer. 4-If a portion of the intra-entity transfer remains in ending inventory of any year, gross profit in ending inventory is recognized and added to consolidated inventory. Required: Identify any wrong information provided by Khalid in each of the above paragraphs. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).