The unrealized intercompany profit in the February 28, 2006, end-of-fiscal year inventories of Samuel Company, the 80%-owned subsidiary of Phillip Corporation, was $10,000, based on billed prices of the merchandise received by Samuel from Phillip. If Phillip and Samuel file separate income tax returns, the criteria for recognizing a deferred tax asset without a valuation allowance are met, and the income tax rate is 40%, which of the following working paper eliminations (explanation omitted) is appropriate for Phillip Corporation and subsidiary on February 28, 2006?

Question

Quizplus · Accepted Answer

The Answer of The unrealized intercompany profit in the February 28, 2006, end-of-fiscal year inventories of Samuel Company, the 80%-owned subsidiary of Phillip Corporation, was $10,000, based on billed prices of the merchandise received by Samuel from Phillip. If Phillip and Samuel file separate income tax returns, the criteria for recognizing a deferred tax asset without a valuation allowance are met, and the income tax rate is 40%, which of the following working paper eliminations (explanation omitted) is appropriate for Phillip Corporation and subsidiary on February 28, 2006?

The Unrealized Intercompany Profit in the February 28, 2006, End-Of-Fiscal