Push Company owns 60% of Shove Company's outstanding common stock.
Intra-entity sales are as follows:

-Assume Push sold the inventory to Shove.
Using the fully adjusted equity method,what journal entry would be recorded by Push to defer the unrealized gross profit on inventory sales to Shove in 20X1?

Question

Push Company owns 60% of Shove Company's outstanding common stock.
Intra-entity sales are as follows:
 
-Assume Push sold the inventory to Shove.
Using the fully adjusted equity method,what journal entry would be recorded by Push to defer the unrealized gross profit on inventory sales to Shove in 20X1?

Quizplus · Accepted Answer

Option A correctly records the entry to defer unrealized gross profit on inventory sales to Shove under the fully adjusted equity method. Push records a debit to "Deferred Gross Profit" and a credit to "Inventory" for the gross profit amount deferred.

Push Company Owns 60% of Shove Company's Outstanding Common Stock