Intercompany transactions refer to the transactions between the companies which have subsidiary and parent relationship. These transactions are identified and adjusted at the time of the consolidation of the parent company and subsidiary company accounts. To indicate: The difference between the effect on the consolidated financial statement of the upstream sales and a downstream sale.

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Chapter 7, Problem 7.13Q

To determine

Concept Introduction:

Intercompany transactions refer to the transactions between the companies which have subsidiary and parent relationship. These transactions are identified and adjusted at the time of the consolidation of the parent company and subsidiary company accounts.

To indicate:The difference between the effect on the consolidated financial statement of the upstream sales and a downstream sale.

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