1. [Preferred stock] Pin Corporation owns 20% of Sob Corporation's preferred stock and 80% of its common stock. Sob's stock outstanding on December 31, 2011, is as follows:

10% cumulative preferred stock .. $ 200,000

Common stock .......... 1,400,000

Sob reported net income of $120,000 for the year ended December 31, 2011. What amount should Pin record as equity in earnings of Sob for the year ended December 31, 2011?

(a) $84,000

(b) $96,000

(c) $96,800

(d) $100,000

2. [Tax] Pat Corporation uses the equity method to account for its 25% investment in Sam, Inc. During 2011, Pat received dividends of $30,000 from Sam and recorded $180,000 as its equity in the earnings of Sam. Additional information follows:

??? The dividends received from Sam are eligible for the 80% dividends-received deduction.

??? There are no other temporary differences.

??? Enacted income tax rates are 30% for 2011 and thereafter.

In its December 31, 2011, balance sheet, what amount should Pat report for deferred income tax liability?

(a) $9,000

(b) $10,800

(c) $45,000

(d) $54,000

3. [Tax] In 2011, Pal Corporation received $300,000 in dividends from Sal Corporation, its 80%-owned subsidiary. What net amount of dividend income should Pal include in its 2011 consolidated tax return?

(a) $300,000

(b) $240,000

(c) $210,000

(d) $0

4. [Tax] Pot Corporation and Sly Corporation filed consolidated tax returns. In January 2011, Pot sold land, with a basis of $60,000 and a fair value of $75,000, to Sly for $100,000. Sly sold the land in December 2012 for $125,000. In its 2012 and 2011 tax returns, what amount of gain should be reported for these transactions in the consolidatedreturn?

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2012 2011 $25,000 $50,000 $50,000 $65,000 $40,000 $25,000 d.