Under which of the following Theories is the elimination of ALL intercompany profits called for?

Question

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The elimination of ALL intercompany profits is called for under the Entity Theory, which treats the parent and its subsidiaries as a single economic entity. This theory considers intercompany transactions as internal transfers rather than separate transactions between different entities, and therefore eliminates any profits or gains realized from these transactions to avoid double counting. The other theories (Ownership, Proprietary, Parent) do not necessarily call for the elimination of all intercompany profits.

Under Which of the Following Theories Is the Elimination of ALL