Which statement is true concerning unrecognized profits in intra-entity inventory sales when an investor uses the equity method?

Question

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The investor must defer downstream ending inventory profits because these profits are not realized until the inventory is sold to an outside party. Under the equity method, the investor recognizes its share of the investee's profits, but must defer its share of any profits from intra-entity sales until the inventory is sold externally.

Which Statement Is True Concerning Unrecognized Profits in Intra-Entity Inventory