Brooks Co. acquired 90% of Hill Inc. on January 3, 2021. During 2021, Brooks sold goods to Hill for $2,500,000 that cost Brooks $1,850,000. Hill still owned 30% of the goods at the end of the year. Cost of goods sold was $11,200,000 for Brooks and $6,600,000 for Hill. What amount of intra-entity gross profit should be deferred in 2021?
A) $0.
B) $65,000.
C) $175,500.
D) $195,000.
E) $585,000.

Question

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The Answer of Brooks Co. acquired 90% of Hill Inc. on January 3, 2021. During 2021, Brooks sold goods to Hill for $2,500,000 that cost Brooks $1,850,000. Hill still owned 30% of the goods at the end of the year. Cost of goods sold was $11,200,000 for Brooks and $6,600,000 for Hill. What amount of intra-entity gross profit should be deferred in 2021?
A) $0.
B) $65,000.
C) $175,500.
D) $195,000.
E) $585,000.

Brooks Co Acquired 90% of Hill Inc