REFERENCE: Ref.01_17 Steven Company Owns 40% of the Outstanding Voting Common Stock

question 47

Essay

REFERENCE: Ref.01_17
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 3,2009,the balance in the Investment in Nicole Corp.account was $503,000.Amortization associated with this acquisition is $12,000 per year.During 2009,Nicole earned net income of $120,000 and paid cash dividends of $40,000.Previously in 2008,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 2008.Additional sales were made to Steven in 2009 at a transfer price of $75,000 that had cost Nicole $54,000.Only 10% of the 2009 purchases had not been sold to outsiders by the end of 2009.
-What amount of unrealized intercompany profit should be deferred by Steven at December 31,2009?

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Definitions:

Suprachiasmatic Nucleus (SCN)

A pair of tiny structures in the brain’s hypothalamus that control the timing of circadian rhythms; the biological clock.

Circadian Rhythms

Natural, internal processes that regulate the sleep-wake cycle, repeating roughly every 24 hours.

Suprachiasmatic Nucleus

A small region of the brain in the hypothalamus, responsible for controlling circadian rhythms.

Alzheimer's Disease

A progressive neurodegenerative disorder characterized by the decline in cognitive function, memory, and ability to perform daily tasks.