Answer:
Inter-company profit eliminated = $12,000
Explanation:
Given:
Value of inventory = $300,000
Cost of inventory = $240,000
Computation of Profit recognized on sale profit
Profit recognized on sale = Value of inventory - Cost of inventory
Profit recognized on sale = $300,000 - $240,000
Profit recognized on sale = $60,000
Computation of Profit margin:
Profit margin = [60000/300000]×100 = 20%
Profit margin = 20% = 0.20
Computation of closing Inventory :
Closing Inventory = $300,000 (1/3)
Closing Inventory = $100,000
Profit during the year = $ 92,000
Value of inventory = $100,000 (1-0.20)= $80,000
Inter-company profit eliminated= $92,000 - $80,000 = $12,000
