Question 1:

Stream Company owns 25 percent of Miller Company and applies the equity method. During year 2021, Miller sold inventory to Stream for $184,000. This inventory had cost only $138,000. Stream resold $104,000 of the inventory during 2021 and the rest during 2022. What amount of gross profit must Stream defer in reporting this investment using the equity method?

Question 2:

Jackson Company owns 25 percent of ABC Company and applies the equity method. During the current year, Jackson buys inventory costing $91,000 and then sells it to ABC for $130,000. At the end of the year, ABC still holds only $22,400 of merchandise. What amount of gross profit must Jackson defer in reporting this investment using the equity method?