Answer:
$ 13,750
Explanation:
Calculation to Determine the amount of Equity in Investee Income that Jager should have reported for 2018
First step is to calculate the intercompany unrealized gain
Remaining inventory — end of year $ 50,000
Gross profit percentage ($33,600 ÷ $96,000)x 35%
Profit within remaining inventory$ 17,500
Intercompany unrealized gain$ 5,250
(Ownership percentage 30%*$ 17,500=$5,250)
Now let calculate the amount of Equity in Investee Income that
Equity in investee income:
Equity income accrual $ 30,000
($100,000 x 30%)
Less Deferral of intercompany unrealized gain ($5,250)
Less Goodwill amortization ($ 11,000)
Equity in investee income$ 13,750
($30,000-$5,250-$11,000)
Therefore the amount of Equity in Investee Income that Jager should have reported for 2018 will be $ 13,750
