The Following Information Pertains to Questions

question 21

Essay

The following information pertains to questions
P Inc.owns 70% of Q Inc.During 2006,P Inc sold inventory to Q for $20,000.Half of this inventory remained in Q's warehouse at December 31,2002 year end.On January 1,2002,Q Inc had inventory in its warehouse which was purchased from P for $5,000.This inventory was sold to an outside party during 2006.Also during 2006,Q Inc sold inventory to P Inc.for $10,000.50% of this inventory remained in P's warehouse at year end.Both companies are subject to a tax rate of 25%.The gross profit percentage on sales is 30% for both companies.P Inc.uses the cost method to account for its Investment in Q Inc.The inventories of both companies as at December 31,2006 was all sold to outsiders during 2007.There were no intercompany transactions during 2007.
-Prepare a schedule showing the realized and unrealized profits for P Inc.for 2006 and 2007.Your schedule should include both pre-tax and after-tax amounts.

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Definitions:

Stress Level

The degree of emotional, psychological, and physical strain or tension experienced by an individual.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together.

Correlation

A statistical measure that describes the extent to which two variables change together, indicating the strength and direction of their relationship.

Interdependence

A relationship between two or more entities in which they are mutually dependent on each other.