Problem 3 Gotham City, Inc. owns all the outstanding stock o…
Problem 3 Gotham City, Inc. owns all the outstanding stock of Joker County, Inc. Amortization expense of $25,000 per year for patented technology resulted from the original acquisition. For 2022, the companies reported the following balances in their respective internal records: Gotham City, Inc. Joker County, Inc. Sales $2,200,000 $600,000 Cost of Goods Sold 650,000 450,000 Operating Expenses 450,000 100,000 Investment Income Not provided -0- Dividends Declared 80,000 30,000 During 2021, Joker County recorded intra-entity sales to Gotham City in the amount of $400,000 for goods that cost Joker County $300,000. During 2022, Joker County recorded intra-entity sales to Gotham City in the amount of $300,000 for goods that cost Joker County $150.000. Of the intra-entity transfers, 50% was still on the books of Gotham City on each of the last two year ends. Assume those goods are sold in the subsequent year. Use this information to answer the following two questions.