In applying the equity method, why does the parent defer 100% of intra-entity inventory gross profits from downstream transfers even when owning a controlling, but less-than-100% ownership in the subsidiary. Because the ending inventory on the parent's books is overstated by the amount of the intra-entity gross profit. Because the equity method requires 100% deferral of intra-entity gross profits in ending inventory regardless of the investor's percentage ownership. The 100% deferral ensures that none of the intra-entity gross profit will be attributable to the noncontrolling interest