Salli Corporation Regularly Purchases Merchandise from Their 90%-Owner,Playtime Corporation

Essay

Salli Corporation regularly purchases merchandise from their 90%-owner,Playtime Corporation.Playtime purchased the 90% interest at a cost equal to 90% of the book value of Salli's net assets.At the time of acquisition,the book values and fair values of Salli's assets and liabilities were equal.Playtime makes their sales to Salli at 120% of cost.In 2012,Salli reported net income of $460,000,and made purchases totaling $172,000 from Playtime.Although Salli had no inventory on hand at the beginning of 2012 that they had purchased from Playtime,at year end,they had $51,600 of this merchandise in inventory.
Required:
1.Determine the unrealized profit in Salli's inventory at December 31,2012.
2.Compute Playtime's income from Salli for 2012.