Pop Corporation acquired an 80 percent interest in Son Company at book value a number of years ago.
Separate incomes of Pop and Son for 2016 were $120,000 and $60,000, respectively. The only transactions between Pop and Son during 2016 were as follows:
1. Pop sold inventory items to Son for $60,000. These items cost Pop $30,000, and half the items were still inventoried at $30,000 by Son at December 31, 2016.
2. Son sold land that cost $70,000 to Pop for $96,000 during 2016. The land was still held by Pop at December 31, 2016.
3. Son paid $24,000 dividends to Pop during 2016.
REQUIRED :
Compute consolidated net income for Pop Corporation and Subsidiary for 2016 under:
1. Parent-company theory
2. Entity theory