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

question 118

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 31,2008?

• A)$1,600.
• B)$4,000.
• C)$8,000.
• D)$15,000.
• E)$20,000.

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Express Consent

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Noncompetition Provision

A clause in a contract that prohibits an individual from entering into or starting a similar profession or trade in competition against another party, typically an employer, for a certain period of time and within a specific geographic area.

Successor Company

A company or entity that takes over the operations, assets, and liabilities of another company, typically through merger or acquisition.

Assignable

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