Hi, I’m not in agreement with what the CFA books says. Just wondering if anyone could give a shot on this. In CFA book 2, Reading 21, intercoporate investement, pg 23, example 6: Jones company owns 25% of Jason company and use equity method of accounting. During 2009 Jones sold $96,000 of inventory to Jason for $160,000. Jason resold $120,000 of this inventory during 2009. … When calculate the 2009 equity income, there is one line that is backed out from the income: Unrealized profit (25% * $16,000) (8,000) The $16,000 is unsold inventory profit. My question is: since this is downstream sale, should all the $16,000 be backed out from the equity income? Thanks!