Reporting investment using the equity method

Reference no: EM13134638

Panner, Inc. owns 30 % of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds only $20,000 of mechandise. What ammount of unrealized gross profit must Panner defer in reporting this investment using the equity method?

a. $2,400

b. $4,800

c. $8,000

d. $10,800

Reference no: EM13134638

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