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Determine the amount of intra-entity profit at the end

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Question

Wilder Inc. holds 35% of the outstanding voting shares of Boswell Co. and appropriately applies the equity method of accounting. Amortization associated with this investment equals $10,000 per year. For 20X2, Boswell reported earnings of $90,000 and paid cash dividends of $35,000.

During 20X2, Boswell acquired inventory for $56,100, which was then sold to Wilder for $85,000. At the end of 20X2, Wilder still held some of this inventory at its transfer price of $45,000.

Required:

(1) Determine the amount of intra-entity profit at the end of 20X2.

(2) Determine the amount of Equity in Investee Income that Wilder should have reported for 20X2.

Reference no: EM132354281

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