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kane inc. owns 30% of woodhouse co. and applies the equity method. during the current year, kane bought inventory costing $71,500 and then sold it to woodhouse for $130,000. at year-end, only $30,000 of merchandise was still being held by woodhouse. what amount of intra-entity gross profit must be deferred by kane?

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abiolataiwo2015

If kane inc. owns 30% of woodhouse co. and applies the equity method. during the current year, kane bought inventory costing $71,500 and then sold it to woodhouse for $130,000. The  amount of intra-entity gross profit that must be deferred by kane is: $4,050.

Intra-entity gross profit

Using this formula

Intra-entity gross profit=MerchandiseĂ—[(Selling price-Cost of inventory)/Selling price]Ă—Rate

Intra-entity gross profit=30,000Ă—[(130,000-71,500)/130,000]Ă—.30

Intra-entity gross profit=30,000Ă—0.45Ă—0.30

Intra-entity gross profit=$4,050

Therefore If kane inc. owns 30% of woodhouse co. and applies the equity method. during the current year, kane bought inventory costing $71,500 and then sold it to woodhouse for $130,000. The  amount of intra-entity gross profit that must be deferred by kane is: $4,050.

Learn more about Intra-entity gross profit here:https://brainly.com/question/23770432

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