Steven Company Owns 40% of the Outstanding Voting Common Stock

question 53

Short Answer

Steven Company owns 40% of the outstanding voting common stock of Nicole Corp. and has the ability to significantly influence the investee's operations. On January 3, 2013, the balance in the Investment in Nicole Corp. account was $503,000. Amortization associated with this acquisition is $12,000 per year. During 2013, Nicole earned net income of $120,000 and paid cash dividends of $40,000. Previously in 2012, Nicole had sold inventory costing $35,000 to Steven for $50,000. All but 25% of that inventory had been sold to outsiders by Steven during 2012. Additional sales were made to Steven in 2013 at a transfer price of $75,000 that had cost Nicole $54,000. Only 10% of the 2013 purchases had not been sold to outsiders by the end of 2013.
What amount of unrealized intra-entity profit should be deferred by Steven at December 31, 2013?

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Definitions:

Informed Consent

A process in which a patient receives full disclosure of and understands the risks, benefits, and alternatives of a proposed procedure or treatment before agreeing to it.

Specimen

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Medical Assistant

An integral member of the health care delivery team, qualified by education and experience to work in the administrative office, the examining room, and the physician office laboratory.

Needle/Syringe

A medical tool used for injecting substances into the body or withdrawing fluids from it.