Cayman Inc. bought 30% of Maya Company on January 1, 2018 for $450,000. The equity method of accounting was used. The book value and fair value of the net assets of Maya on that date were $1,500,000. Maya began supplying inventory to Cayman as follows: Cost to MayaTransfer PriceAmount Held by Cayman at Year-End2018$30,000$45,000$9,0002019$48,000$80,00020,000??Maya reported net income of $100,000 in 2018 and $120,000 in 2019 while paying $40,000 in dividends each year.?What is the investor's share of gross profit on intra-entity inventory sales that should be deferred on December 31, 2018?
A. $6,000.
B. $4,500.
C. $900.
D. $3,000.
E. $9,000.
Answer: C
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