On January 1, 2019, King Corp acquired 80 of Kong Corp for $500,000 King uses the cost method to account for its investment On January 1, 2019, Kong's retained earnings and common shares were $350,000 and $110,000, respectively Kong's book values did not differ materially from its fair values on the date of acquisition with the following exceptions Inventory had a fair value that was $20,000 higher than its book value This inventory was sold to outsiders during 2019 A patent (which had not previously been accounted for) was identified on the acquisition date with an estimated fair value of $15,000 The patent had an estimated useful life of 3 years The Financial Statements of King Corp and Kong Corp for the year ended December 31, 2020 are shown below Income Statements Other Information King sold a tract of Land to Kong at a profit of $10,000 during 2020 This land is still the property of Kong Corp On January 1, 2020, Kong sold equipment to King at a price that was $20,000 higher than its book value The equipment had a remaining useful life of 4 years from that date On January 1, 2020, King's inventories contained items purchased during 2019 from Kong for $10,000 This entire inventory was sold to outsiders during 2020 Also during 2020, King sold inventory to Kong for $50,000 Half this inventory is still in Kong's warehouse at year end All sales are priced at a 25 mark up above cost, regardless of whether the sales are internal or external There was a goodwill impairment loss of $4,000 during 2020 Both companies are subject to an effective tax rate of 40 Both companies use straight line amortization Q1 What is the total amount of pre tax profit from intercompany inventory sales that was realized during 2020 Q2 What is the total amount of unrealized pre tax profits in inventory at the start of 2021 Q3 What would be the non controlling interest amount in King's Consolidated Net Income for 2020 Sales King Corp $500,000 $300,000 Kong Corp $300,000 $120,000 Other Revenues Less Expenses Cost of Goods Sold Depreciation Expense Other Expenses Income Tax Expense Net Income $400,000 $ 20,000 $80,000 $120,000 $180,000 $240,000 $10,000 $40,000 $52,000 $78,000 Retained Earnings Statements Balance, January 1, 2020 Net Income Less Dividends Retained Earnings King Corp $250,000 $180,000 ($30,000) $400,000 Kong Corp $350,000 $78,000 ($38,000) $390,000 Balance Sheets King Corp $50,000 $100,000 $50,000 $500,000 Kong Corp $25,000 $250,000 $250,000 W Cash Accounts Receivable Inventory Investment in Kong Corp Land Equipment Accumulated Depreciation Total Assets Current Liabilities Dividends Payable Common Shares Retained Earnings Total Liabilities and Equity $400,000 ($250,000) $850,000 $320,000 $30,000 $100,000 $400,000 $850,000 $25,000 $200,000 ($150,000) $600,000 $62,000 $38,000 $110,000 $390,000 $600,000

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On January 1, 2019, King Corp. acquired 80% of Kong Corp. for $500,000. King uses the cost method to account for its investment. On January

On January 1, 2019, King Corp. acquired 80% of Kong Corp. for $500,000. King uses the cost method to account for its investment. On January 1, 2019, Kong's retained earnings and common shares were $350,000 and $110,000, respectively. Kong's book values did not differ materially from its fair values on the date of acquisition with the following exceptions:

Inventory had a fair value that was $20,000 higher than its book value. This inventory was sold to outsiders during 2019.
A patent (which had not previously been accounted for) was identified on the acquisition date with an estimated fair value of $15,000. The patent had an estimated useful life of 3 years.

The Financial Statements of King Corp. and Kong Corp. for the year ended December 31, 2020 are shown below:

Income Statements

Other Information:

King sold a tract of Land to Kong at a profit of $10,000 during 2020. This land is still the property of Kong Corp.
On January 1, 2020, Kong sold equipment to King at a price that was $20,000 higher than its book value. The equipment had a remaining useful life of 4 years from that date.
On January 1, 2020, King's inventories contained items purchased during 2019 from Kong for $10,000. This entire inventory was sold to outsiders during 2020. Also during 2020, King sold inventory to Kong for $50,000. Half this inventory is still in Kong's warehouse at year end. All sales are priced at a 25% mark-up above cost, regardless of whether the sales are internal or external.
There was a goodwill impairment loss of $4,000 during 2020.
Both companies are subject to an effective tax rate of 40%
Both companies use straight line amortization.

Q1: What is the total amount of pre-tax profit from intercompany inventory sales that was realized during 2020?

Q2 :What is the total amount of unrealized pre-tax profits in inventory at the start of 2021

Q3: What would be the non-controlling interest amount in King's Consolidated Net Income for 2020?

Sales King Corp. $500,000 $300,000 Kong Corp. $300,000 $120,000 Other Revenues Less: Expenses Cost of Goods Sold Depreciation Expense Other Expenses Income Tax Expense Net Income $400,000 $ 20,000 $80,000 $120,000 $180,000 $240,000 $10,000 $40,000 $52,000 $78,000 Retained Earnings Statements Balance, January 1, 2020 Net Income Less: Dividends Retained Earnings King Corp. $250,000 $180,000 ($30,000) $400,000 Kong Corp. $350,000 $78,000 ($38,000) $390,000 Balance Sheets King Corp. $50,000 $100,000 $50,000 $500,000 Kong Corp. $25,000 $250,000 $250,000 W Cash Accounts Receivable Inventory Investment in Kong Corp. Land Equipment Accumulated Depreciation Total Assets Current Liabilities Dividends Payable Common Shares Retained Earnings Total Liabilities and Equity $400,000 ($250,000) $850,000 $320,000 $30,000 $100,000 $400,000 $850,000 $25,000 $200,000 ($150,000) $600,000 $62,000 $38,000 $110,000 $390,000 $600,000