Penguin Corporation acquired a 60% interest in Squid Corporation on January 1, 2014, at a cost equal to 60% of the book value of Squid's net assets. At the time of the acquisition, the book values of Squid's assets and liabilities were equal to the fair values. Squid reports net income of $880,000 for 2014. Penguin regularly sells merchandise to Squid at 120% of Penguin's cost. The intercompany sales information for 2014 is as follows: Intercompany sales at selling price Sales value of merchandise unsold by Squid $672,000 $132,000 Required: Determine the unrealized profit in Squid's inventory at December 31, 2014 2 Compute Penquin's income from Squid for 2014