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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

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 value of the net assets of Maya on that date were $1,500,000. Maya began supplying inventory to Cayman as follows:

Cost to

Transfer

Amount Held by

Year

Maya

Price

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.

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.

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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