Question
Cayman Inc. bought 30% of Maya Company on January 1, 2013 for $450,000. The equity method of accounting was used. The book value and fair
Year | Cost to Maya | Transfer Price | Amount Held by Cayman at Year-End |
2013 | $30,000 | $45,000 | $9,000 |
2014 | $48,000 | $80,000 | $20,000 |
Maya reported net income of $100,000 in 2013 and $120,000 in 2014 while paying $40,000 in dividends each year.
1) What is the amount of unrealized intra-entity inventory profit to be deferred on December 31, 2013?
A. $900
B. $3,000
C. $4,500
D. $6,000
E. $9,000
2) What is the amount of unrealized inventory profit to be deferred on December 31, 2014?
A. $1,500
B. $2,400
C. $3,600
D. $4,000
E. $8,000
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Financial Reporting and Analysis
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
7th edition
1259722651, 978-1259722653
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