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Equity Method Entry for Panner's 30% Ownership of Watkins

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Panner, Inc. owns 30 % of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds only $20,000 of mechandise. What ammount of unrealized gross profit must Panner defer in reporting this investment using the equity method?

a. $2,400
b. $4,800
c. $8,000
d. $10,800

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Equity method entry for Panner's 30% ownership of Watkins.

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Panner, Inc. owns 30 % of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins ...

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