Investor owns 30% of Investee and applies the equity method. In 2020, Investor sells merchandise costing $240,000 to Investee for $300,000. Investee's ending inventory includes $50,000 purchased from Investor. What amount of unrealized gross profit must be deferred in the equity method entry? Select one: A. $50,000 B. $15,000 C. $10,000 D. $ 3,000

On January 1, 2020, Combs Corporation sold a tract of land to its 100% owned subsidiary, Tiniton, Inc., for $550,000. The land originally cost Combs $440,000. Tiniton reported net income of $270,000 and $305,000 for 2020 and 2021, respectively. Combs received dividends from Tiniton of $35,000 and $36,000 for 2020 and 2021, respectively. On the consolidation worksheet for 2020, what adjustment would be made to the Land account? Select one: A. $110,000 credit B. $440,000 credit C. $550,000 credit D. $110,000 debit

When an investor can no longer exert significant influence over the investee, it must change to the fair value method if the investment has a readily determinable fair value. What is the required accounting treatment on investor's books? Select one: A. A prior period adjustment is recorded to bring retained earnings to what it would have been if the new method had been used in the past. B. The book value on the date of change becomes the "cost" of the investment. C. The investment will be adjusted to its fair value. D. Both B and C are required.

Brendon, Inc. acquired 100% of Weston Enterprises on January 2, 2020. During 2020, Brendon sold Weston for $700,000 goods which had cost $500,000. Weston still owned 40% of the goods at the end of the year. In 2021, Brendon sold goods with a cost of $500,000 to Weston for $700,000, and the buyer still owned 40% of the goods at year-end. For 2021, cost of goods sold was $1,000,000 for Brendon and $990,000 for Weston. What was consolidated cost of goods sold for 2021? Select one: A. $1,990,000 B. $1,290,000 C. $1,870,000 D. $1,370,000

Emily Corporation purchased all of Ace Company's common stock on January 1, 2020, for $1,000,000 cash. The investee's stockholders' equity amounted to $400,000. The excess of $600,000 was due to an unrecorded patent with a six-year life. In 2020, Ace reported net income of $250,000 and paid dividends of $25,000. For 2020, what amount of Equity Income will Emily record? Select one: A. $825,000 B. $175,000 C. $125,000 D. $150,000