Pop Corporation owns an 80 percent interest in Son Corporation and at December 31, 2016, Pop's investment in Son on an equity basis was equal to 80 percent of Son's stockholders' equity. During 2017, Son sells merchandise to Pop for $200,000, at a gross profit to Son of $40,000. At December 31, 2017, half of this merchandise is included in Pop's inventory. Separate incomes for Pop and Son for 2017 are summarized as follows:
___________________ Pop ________________ Son
Sales ................... $1,000,000 ............ $600,000
Cost of sales ........... (500,000) ............ (400,000)
Gross profit ............ 500,000 ................ 200,000
Operating expenses ... (250,000) ............. (80,000)
Separate incomes ...... $ 250,000 ............ $120,000
1. Pop's income from Son for 2017 is:
a. $96,000
b. $80,000
c. $76,000
d. $56,000
2. Consolidated cost of sales for 2017 is:
a. $920,000
b. $900,000
c. $880,000
d. $720,000
3. Non-controlling interest share for 2017 is:
a. $24,000
b. $20,000
c. $8,000
d. $4,000