Yukon Co. acquired 75% percent of the voting common stock of Ontario Corp. on January 1, 2013. During the year, Yukon made sales of inventory to Ontario. The inventory cost Yukon $260,000 and was sold to Ontario for $390,000. Ontario still had $60,000 of the goods in its inventory at the end of the year. The amount of unrealized intra-entity profit that should be eliminated in the consolidation process at the end of 2013 is
A) $15,000.
B) $20,000.
C) $32,500.
D) $30,000.
E) $110,000.

Question

Quizplus · Accepted Answer

Intra-entity gross profit ($390,000 - $260,000) $130,000 × Inventory remaining at year's end ($60,000/$390,000) = $20,000

Yukon Co Acquired 75% Percent of the Voting Common Stock of of Ontario