Prince Corp.owned 80% of Kile Corp.'s common stock.During October 2009,Kile sold merchandise to Prince for $140,000.At December 31,2009,50% of this merchandise remained in Prince's inventory.For 2009,gross profit percentages were 30% of sales for Prince and 40% of sales for Kile.The amount of unrealized intercompany profit in ending inventory at December 31,2009 that should be eliminated in the consolidation process is

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The unrealized intercompany profit is the difference between the cost to the buying affiliate and the selling price of the affiliate that sold the merchandise. In this case, the cost to Prince is $140,000 * 50% = $70,000, and the selling price of Kile is $140,000. Therefore, the unrealized intercompany profit is $140,000 - $70,000 = $70,000. Since Prince owns 80% of Kile, the amount of unrealized intercompany profit that should be eliminated in the consolidation process is $70,000 * 80% = $56,000.