Tower Inc. owns 30% of Yale Co. and applies the equity method. During the current year, Tower bought inventory costing $66,000 and then sold it to Yale for $120,000. At year-end, only $24,000 of merchandise was still being held by Yale. What amount of intra-entity inventory profit must be deferred by Tower?

Question

Quizplus · Accepted Answer

$120,000 - $66,000 = $54,000$24,000/$120,000 = 20% × $54,000 = $10,800 × 30% = $3,240

Tower Inc Owns 30% of Yale Co