REFERENCE: Ref.01_14 Acker Inc.bought 40% of Howell Co.on January 1,2008 for $576,000.The

question 1

Multiple Choice

REFERENCE: Ref.01_14
Acker Inc.bought 40% of Howell Co.on January 1,2008 for $576,000.The equity method of accounting was used.The book value and fair value of the net assets of Howell on that date were $1,440,000.Acker began supplying inventory to Howell as follows:
Howell reported net income of $100,000 in 2008 and $120,000 in 2009 while paying $40,000 in dividends each year.
-What is the amount of unrealized intercompany inventory profit to be deferred on December 31,2009?

• A)$1,600.
• B)$8,000.
• C)$15,000.
• D)$20,000.
• E)$40,000

---

Definitions:

Constituencies

Groups of supporters, customers, or potential voters who back a particular organization, politician, or political agenda.

Agents

Individually authorized entities or people who act on behalf of others in various transactions or negotiations.

Use

Use refers to the act of employing something or someone for a particular purpose.

Exceeding Authority

Acting beyond or exceeding the powers or rights officially granted to an individual or body.