Question
Cayman Inc. bought 30% of Maya Company on January 1, 2018 for $450,000. The equity method of accounting was used. The book value and fair
Cayman Inc. bought 30% of Maya Company on January 1, 2018 for $450,000. The equity method of accounting was used. The book value and fair value of the net assets of Maya on that date were $1,500,000. Maya began supplying inventory to Cayman as follows:
Cost to Maya Transfer Price Amount Held by Cayman at Year-End 2018 $ 30,000 $ 45,000 $9,000 2019 $ 48,000 $ 80,000 20,000
Maya reported net income of $100,000 in 2018 and $120,000 in 2019 while paying $40,000 in dividends each year.
What is the investor's share of gross profit on intra-entity inventory sales that should be deferred on December 31, 2019?
Multiple Choice
- $1,500.
- $2,400.
- $3,600.
- $4,000.
- $8,000.
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