Scroll, Inc., a wholly owned subsidiary of Pirn, Inc., began operations on January 1, Year 4. The following information is from the condensed Year 4 income statements: Pirn Scroll Sales to Scroll $100,000 $ -- Sales to others 400,000 300,000 $500,000 $300,000 Cost of goods sold: Acquired from Pirn -- 80,000 Acquired from others 350,000 190,000 Gross profit $150,000 $ 30,000 Depreciation 40,000 10,000 Other expenses 60,000 15,000 Income from operations $ 50,000 $ 5,000 Gain on sale of equipment to Scroll 12,000 -- Income before income taxes $ 62,000 $ 5,000 Additional Information Sales by Pirn to Scroll are made on the same terms as those made to third parties. Equipment purchased by Scroll from Pirn for $36,000 on January 1, Year 4, is depreciated using the straight-line method over 4 years. In Pirn’s December 31, Year 4, consolidating worksheet, how much intraentity profit should be eliminated from Scroll’s inventory?

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To calculate the intraentity profit that should be eliminated from Scrolls inventory we need to dete... View the full answer