Consolidation is a process in which financial statements of a subsidiary is merged with financial statements of the parent. In this process, the effect of intercompany transactions is eliminated. To explain: Whether there is an opportunity to shift profits to controlling interest with both direct financing and sales-type leases. Also, the difference between these leases with respect to income shifting.

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Chapter 5, Problem 6UTI

To determine

Introduction: Consolidation is a process in which financial statements of a subsidiary is merged with financial statements of the parent. In this process, the effect of intercompany transactions is eliminated.

To explain: Whether there is an opportunity to shift profits to controlling interest with both direct financing and sales-type leases. Also, the difference between these leases with respect to income shifting.

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