Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner

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Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds only $20,000 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method?

  a. $2,400
  b. $4,800
  c. $8,000
  d. $10,800

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Advanced Accounting

ISBN: 978-1259444951

13th edition

Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni

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