Parrot Corporation holds a 42 percent ownership of Sunrise, Inc. The equity method is being applied. Parrot assigned the entire original excess purchase price over book value to goodwill. During 2012, the two companies made intra-entity inventory transfers. A portion of this mer- chandise was not resold until 2013. During 2013, additional transfers were made.

What is the difference between upstream transfers and downstream transfers?

Solution

Upward transaction represent sale by investee and purchase ……………………………………………………………..

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