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

Question

Quizplus · Accepted Answer

The elimination of ALL intercompany profits is called for under the Entity Theory, which states that a parent company and its subsidiaries should be treated as a single economic entity. This means that their transactions should be eliminated for consolidation purposes, including intercompany profits. The other theories (Ownership, Proprietary, Parent Company) do not necessarily require the elimination of all intercompany profits.

Under Which of the Following Theories Is the Elimination of ALL