Penguin Corporation acquired a 60% interest in Squid Corporation on January 1,2014,at a cost equal to 60% of the book value of Squid's net assets.At the time of the acquisition,the book values of Squid's assets and liabilities were equal to the fair values.Squid reports net income of $880,000 for 2014.Penguin regularly sells merchandise to Squid at 120% of Penguin's cost.The intercompany sales information for 2014 is as follows:
Required:
1.Determine the unrealized profit in Squid's inventory at December 31,2014.
Definitions:
Entrepreneurs
Individuals who initiate, manage, and take the risk of starting and running a new business venture.
Loan
is a sum of money borrowed that is expected to be paid back with interest.
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Individuals who undertake the creation, organization, and ownership of a new business venture, facing considerable risk and uncertainty but potentially gaining significant rewards.
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