In 2006, a home office shipped inventory costing $60,000 to its branch for $90,000. At the end of 2006, the branch reported $30,000 of this inventory in its balance sheet. The amount of unrealized intracompany profit at the end of 2006 is

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The unrealized intracompany profit is calculated on the inventory still held by the branch. The branch holds $30,000 of inventory, which was marked up by $30,000 ($90,000 - $60,000). The markup percentage is 50% ($30,000 markup on $60,000 cost). Therefore, the unrealized profit on the $30,000 inventory is $10,000 (50% of $20,000).

In 2006, a Home Office Shipped Inventory Costing $60,000 to Its