How much intercompany (after-tax) profit was realized during 2019 on Stempy's 2019 sale of assets to Rin?

Question

Quizplus · Accepted Answer

The assets sold by Stempy to Rin had a book value of $4,000 and were sold for $6,000. The gain on the sale was $2,000. Since the transaction was an intercompany sale, this gain must be eliminated in consolidation. Therefore, Stempy's intercompany profit on the sale of assets to Rin was $2,000, which is the difference between the original gain of $2,000 and the elimination of that gain in consolidation. Since the question asks for after-tax profit, we would need more information about the tax status of Stempy and Rin to calculate this amount.

How Much Intercompany (After-Tax) Profit Was Realized During 2019 on Stempy's