When you are transferring inventory, and the

transfer is downstream, and the parent is using

the equity method to account for the investment,

what account is debited to recognize the

unrealized profit that was deferred in the previous

year?

Question 4 options:

a.Debit Noncontrolling Interest in Subsidiary Net Income.

b.Debit Retained Earnings of the Parent company.

c.Debit Retained Earnings of the Subsidiary company.

d.Previous year deferred unrealized profit on inventory transfers is never recognized.

Debit Equity in Subsidiary Income.