P Co acquired an 80% interest in S Co on1/1/2014, when the book values of S assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of S net assets. During 2014, P sold merchandise that cost $86,000 to S for $70,000. On 31/12/2014, three-fourths of the merchandise acquired from P remained in S inventory. Separate incomes (investment income not included) of the two companies are as follows: P S Sales Revenue 180,000 160,000 Cost of Goods Sold 120, 000 90,000 Operating Expenses 17,000 21,000 Separate incomes 43,000 49,000 What is P income from S for 2014? Select one: a. $39,200 b. $49,000 c. $ 51,200 d. $ 29, 600
P Co acquired an 80% interest in S Co on1/1/2014, when the book values of S assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of S net assets. During 2014, P sold merchandise that cost $86,000 to S for $70,000. On 31/12/2014, three-fourths of the merchandise acquired from P remained in S inventory. Separate incomes (investment income not included) of the two companies are as follows: P S Sales Revenue 180,000 160,000 Cost of Goods Sold 120, 000 90,000 Operating Expenses 17,000 21,000 Separate incomes 43,000 49,000 What is P income from S for 2014? Select one: a. $39,200 b. $49,000 c. $ 51,200 d. $ 29, 600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:P Co acquired an 80% interest in S Co on1/1/2014,
when the book values of S assets and liabilities were
equal to their fair values. The cost of the 80% interest
was equal to 80% of the book value of S net assets.
During 2014, P sold merchandise that cost $86,000 to S
for $70,000. On 31/12/2014, three-fourths of the
merchandise acquired from P remained in S inventory.
Separate incomes (investment income not included) of
the two companies are as follows: P S Sales Revenue
180,000 160,000 Cost of Goods Sold 120, 000 90, 000
Operating Expenses 17,000 21,000 Separate incomes
43,000 49,000 What is P income from S for 2014?
Select one: a. $39,200 b. $49,000 c. $ 51,200 d. $
29,600
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