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Investor owns 40 % of Investee and applies the equity method. In 2012 , Investee sells merchandise costing $50,000 to Investor for $70,000. Investor's ending

Investor owns 40% ofInvestee and applies the equity method. In 2012,Investee sellsmerchandise costing $50,000 toInvestorfor $70,000.Investor'sending inventory includes $30,000 purchased from investee. What amount of unrealized gross must be deferred in the equity method entry?

Correct answer: $4,000

why?

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