Cayman Inc., brought 30% Maya Company on January 1, 2013, for $450,000. The equity method of accounting was used. The book value and fair value of the net assets of Maya on that date were $1,500,000. Maya began supplying inventory to Cayman as follows: Year Cost to Maya Transfer Price Amount Held at year-End 2013 $30,000 2014 $48,000 $45,000 $80,000 $9,000 $20,000 Maya reported a net income of $100,000 in 2013 and $120,000 in 2014 while paying $40,000 in dividends each year. What is the amount of unrealized inventory profit to be deferred on December 31, 2014? a. $8,000 b. $3,600 c. $4,000 d. $1,500 e. $2,400 For Mortenson Company, the following information is available: Cost of goods sold $130,000 Dividend revenue $5,000 Income tax expense $12,000 Operating expenses $46,000 Sales revenue $200,000 In Mortenson's multiple-step income Statement, gross profit. a. should not be reported. b. should be reported at $17,000. c. should be reported at $70,000. d. should be reported at $75,000.

Cayman Inc., brought 30% Maya Company on January 1, 2013, for $450,000. The equity method of accounting was used. The book value and fair value of the net assets of Maya on that date were $1,500,000. Maya began supplying inventory to Cayman as follows: Year Cost to Maya Transfer Price Amount Held at year-End 2013 $30,000 2014 $48,000 $45,000 $80,000 $9,000 $20,000 Maya reported a net income of $100,000 in 2013 and $120,000 in 2014 while paying $40,000 in dividends each year. What is the amount of unrealized inventory profit to be deferred on December 31, 2014? a. $8,000 b. $3,600 c. $4,000 d. $1,500 e. $2,400 For Mortenson Company, the following information is available: Cost of goods sold $130,000 Dividend revenue $5,000 Income tax expense $12,000 Operating expenses $46,000 Sales revenue $200,000 In Mortenson's multiple-step income Statement, gross profit. a. should not be reported. b. should be reported at $17,000. c. should be reported at $70,000. d. should be reported at $75,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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