Sub Corporation is an 90%-owned subsidiary of Parent Company. Sub buys half of its raw materials from Parent. The transfer price is exactly the same price as Sub pays to buy identical raw materials from outside suppliers and the same price as Parent sells the materials to unrelated customers. In preparing consolidated statements for Parent Company and Sub Corporation:.a. The intercompany transactions can be ignored because the transfer price represents arm’s-length bargaining b. Any unrealized profit from intercompany sales remaining in Pan’s ending inventory must be offset against the unrealized profit in Pan’s beginning inventory
c. Any unrealized profit on the intercompany transactions in Sar’s ending inventory is eliminated in its entirety
d. Only 90 percent of any unrealized profit on the intercompany transactions in Sar’s ending inventory is eliminated