Find Corp Is a Joint Operation in Which Seek Inc

question 1

Multiple Choice

Find Corp. is a joint operation in which Seek Inc. has a 20% interest. Seek reports its investment in Find using proportionately adjusted financial statements. A contractual agreement gives Seek proportionate rights (20%) to all of Finds' assets and proportionate responsibilities (20%) for all of Find's liabilities. Seek uses the equity method to record its investment but has yet to make any journal entries related to its investment in Find for 2020. The financial statements of both companies as at December 31, 2020, are shown below.
$\begin{array}{|l|r|r|}\hline & \text { Seek Inc. } & \text { Find Corp. } \\\hline \text { INCOME STATEMENTS } & & \\\hline \text { Sales } & \$ 800,000 & \$ 200,000 \\\hline \text { Cost of Sales } & \$ 400,000 & \$ 100,000 \\\hline \text { Other Expenses } & \$ 200,000 & \$ 60,000 \\\hline \text { Net Income } & \$ 200,000 & \$ 40,000 \\\hline \text { BALANCE SHEETS } & & \\\hline \text { Miscellaneous Assets } & \$ 600,000 & \$ 300,000 \\\hline \text { Inventory } & \$ 120,000 & \$ 60,000 \\\hline \text { Investment in Find } & \$ 180,000 & \\\hline \text { Total Assets } & \$ 900,000 & \$ \mathbf{3 6 0 , 0 0 0} \\\hline \text { Miscellaneous Liabilities } & \$ 160,000 & \$ 80,000 \\\hline \text { Common Shares } & \$ 200,000 & \$ 100,000 \\\hline \text { Retained Earnings, Jan 1 } & \$ 340,000 & \$ 140,000 \\\hline \text { Net Income } & \$ 200,000 & \$ 40,000 \\\hline \text { Total Liabilities \& Equity } & \$ 900,000 & \$ 360,000 \\\hline\end{array}$ During 2020, Seek sold merchandise totaling $120,000 to Find and recorded a gross profit of 50% on these sales. At the end of 2020, Find's inventory contained $30,000 worth of merchandise purchased from Seek. Find also owed $50,000 to Seek at the end of 2020.
Both companies are subject to a 40% tax rate.
What is the total amount of deferred taxes that would appear on Seek's Consolidated Balance Sheet as at December 31, 2020?

• A) $800
• B) $1,200
• C) $6,000
• D) $8,000

Identify the true scope of operations management across various types of organizations.

Acknowledge the diverse challenges top executives face regarding productivity, quality, speed, and customer service.

Recognize the key role of productivity in achieving competitive advantage.

Understand typical productivity obstacles and strategies for overcoming them.

---

Definitions:

Choke Under Pressure

The phenomenon where an individual fails to perform to their usual standards because of nervousness or anxiety in high-pressure situations.

General Adaptation Syndrome

A three-stage response (alarm, resistance, exhaustion) that the body has to stress.

Anatomy 101

A foundational course in the study of human body structures and functions.

Master Gland

Another term for the pituitary gland, which is responsible for controlling several other hormone glands in the body, influencing growth, metabolism, and reproduction.