E 5-4 Upstream sales 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. Noncontrolling interest share for 2017 is:

a $24,000 b $20,000 c $8,000 d $4,000