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How much intercompany profit was realized

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Reference no: EM132588315

Rin owns 80% of Stempy Inc. On January 1, 2019, the investment in Stempy account had a balance of $375,000.

The following two transactions took place on January 1, 2019:

  1. Rin sold a depreciable asset to Stempy at a before tax gain of $16,000.
  2. Stempy sold a depreciable assets to Rin at a before tax gain of gain of $26,000.

Both assets are being depreciated over 18 years from the time the transaction of the sale took place.

Stempy's Net Income / loss (after tax) and Dividends for 2019 are shown below.

Net Income (loss)($57,000)

Dividends$30,000

Problem 1: How much intercompany (after-tax) profit was realized during 2019 on Stempy's sale of assets to Rin, if the tax rate was 40%?

Problem 2: What is the total amount of consolidated unrealized profit (after-tax) remaining at the end of 2019, if the tax rate was 30%?

Problem 3: How much intercompany (after-tax) profit was realized during 2019 from Rin's sale of assets to Stempy, if the tax rate was 40%?

Problem 4: What is the total amount of consolidated unrealized profit (after-tax) remaining at the end of 2019, if the tax rate was 40%?

Reference no: EM132588315

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