Petrel Corporation acquired a 60% interest in Salt Corporation on January 1, 2005, at a cost equal to book value and fair value. Salt reports net...

Petrel Corporation acquired a 60% interest in Salt Corporation on January 1, 2005, at a cost equal to book value and fair value. Salt reports net income of $880,000 for 2005. Petrel regularly sells merchandise to Salt at 120% of Petrel’s cost. The intercompany sales information for 2004 is as follows:$ 672,000Value of merchandise remaining132,000Required:1. Determine the unrealized profit in Salt’s inventory at December 31, 2004.2. Compute Petrel’s income from Salt for 2005.