Question

Polychromasia Company sold inventory costing $30,000 to its subsidiary, Simply Colorful, for double its cost in 2009. Polychromasia owns 80% of Simply Colorful. Simply resold $50,000 of this inventory for $60,000 to outsiders in 2009. How much unrealized profit exists at the end of the year?

a) $20,000
b) $8,000
c) $10,000
d) $5,000

Answer 1

D.

Step-by-step explanation:

30000 x 2 = 60000

60000 - 50000 = 10000

10000/2

= 5000