Company IR owns 30% of Company IE1 and 40% of Company IE2. IE1 sells inventory to IE2

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Company IR owns 30% of Company IE1 and 40% of Company IE2. IE1 sells inventory to IE2 at a profit of $ 20,000. All the goods are still in IE2’s inventory at year-end. By what amount should IR’s equity- basis investment income be adjusted to eliminate the unrealized profit?

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Advanced Financial Accounting

ISBN: 978-0137030385

6th edition

Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay

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