When a parent sells inventory to a subsidiary using the initial value method, intra-entity gross profits are included in the beginning inventory. Reassigning net income from the prior year to the current year.
A subsidiary is a company that is owned by another company, which is usually referred to as the parent company or the holding company. The parent company has a controlling interest in the subsidiary company, which means it owns or controls more than half of its stock.
When a subsidiary is owned entirely by another company, it is referred to as a wholly owned subsidiary. When discussing a reverse triangle mortgage, subsidiaries become extremely important.
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