The Following Information Pertains to Questions

question 7

Multiple Choice

The following information pertains to questions
Find Corp.is a joint venture in which Seek Inc.has a 20% interest.Seek uses the equity method to account for its investment but has yet to make any journal entries for 2010.The financial statements of both companies are shown below on December 31,2010. During 2010,Seek sold merchandise totaling $120,000 to Find and recorded a gross profit of 50% on these sales.At the end of 2010,Find's inventory contained $30,000 worth of merchandise purchased from Seek.Find also owed $50,000 to find at the end of 2010.
Seek shall use the proportionate consolidation method (current Canadian GAAP) to report its investment in Find Corp.for 2010.Both companies are subject to 40% tax rate.
-What is the amount of miscellaneous liabilities that would appear on Seek's December 31,2010 Consolidated Balance Sheet?

• A)$166,000
• B)$176,000
• C)$240,000
• D)$230,000

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Definitions:

Investment Account

An account held at a financial institution that is used for the purpose of investing in securities such as stocks, bonds, mutual funds, and other investment vehicles.

Unrealised Profit

Profit that has been recorded on paper due to accounting entries but has not yet been realized through actual cash transactions.

Inventory Write-down

A reduction in the book value of inventory that reflects a decrease in the market value of the items or their usability.