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Lake acquired a controlling interest in Boxwood several years ago. During the current fiscal period,
the two companies individually reported the following income (exclusive of any investment
income): Lake $ 387,000 Boxwood 129,000 Lake paid a $50,000 cash dividend during the current
year, and Boxwood distributed $12,000. Boxwood sells inventory to Lake each period. Intra-entity
gross profits of $15,200 were present in Lake's beginning inventory for the

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  • 1. Lake acquired a controlling interest in Boxwood several years ago. During the current fiscal period, the two companies individually reported the following income (exclusive of any investment income): Lake $ 387,000 Boxwood 129,000 Lake paid a $50,000 cash dividend during the current year, and Boxwood distributed $12,000. Boxwood sells inventory to Lake each period. Intra-entity gross profits of $15,200 were present in Lake's beginning inventory for the