1. Dunn Corporation owns 100 percent of Grey Corporations common stock. On January 2, 2020, Dunn sold to Grey $53,300 of machinery with a carrying amount of $39,250. Grey is depreciating the acquired machinery over a five-year remaining life by the straight-line method. The net adjustments to compute 2020 and 2021 consolidated net income would be an increase (decrease) of

Multiple Choice

• 2020	2021
  $(11,240)	$2,810

• 2020	2021
  $(14,050)	0

• 2020	2021
  $(11,240)	0

• 2020	2021
  $(14,050)	$2,810

2. Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2019, Thomson acquired a building with a 10-year life for $444,000. Thomson depreciated the building on the straight-line basis assuming no salvage value. On January 1, 2021, Thomson sold this building to Stayer for $394,400. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2021, how does this transfer affect the computation of consolidated net income?

Multiple Choice

• Net income is reduced by $44,100.

• Net income is reduced by $39,200.

• Net income is reduced by $34,240.

• Net income is reduced by $34,300.

3. Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago. During 2020, Skybox sold inventory costing $98,000 to Parkette for $140,000. A total of 15 percent of this inventory was not sold to outsiders until 2021. During 2021, Skybox sold inventory costing $196,875 to Parkette for $262,500. A total of 32 percent of this inventory was not sold to outsiders until 2022. In 2021, Parkette reported cost of goods sold of $382,500 while Skybox reported $302,500. What is the consolidated cost of goods sold in 2021?

Multiple Choice

• $446,125.

• $699,700.

• $437,200.

• $407,800.