1)

P acquired 100% of the shares of S on Jan 1 2018 by paying $350,000. On that date, the books value of the assets of S was $500,000 and liabilities was $200,000. Also, on that date, the book value of common stock of S the $200,000 and retained earnings was $100,000. The book values and fair values of assets and liabilities of S were same except for land which had increased in value by $20,000 and inventories which had decreased in value by $8,000. The amount paid for goodwill by P is

		$0 because a bargain will be recorded in this transaction since the purchase price is less than the fair value of net assets.
		$312,000
		$22,000
		$38,000

2)

Phips Co. purchases 100 percent of Sips Company on January 1, 20X2, when Phips retained earnings balance is $320,000 and Sips RE balance is $120,000. During 20X2, Sips reports $20,000 of net income and declares $8,000 of dividends. Phips reports $125,000 of separate operating earnings plus $20,000 of equity-method income from its 100 percent interest in Sips; Phips declares dividends of $35,000.

What is Sips retained earnings balance on December 31, 20X2 in its individual RE statement?

		$140,000
		$132,000
		$120,000
		$108,00

3)

Company P purchased 90% stock in Company S on Jan 1, 20X1 for $200,000. Company S reported the following information for the year 20X1:

Income before Extraordinary Income $100,000

Extraordinary Income 30,000

Net Income 130,000

Also, Company S paid a dividend of $40,000 during the year 20X1.

Under the equity method, in the books of P,

		The extraordinary income will be credited with $77,000.
		The extraordinary income will be credited with $27,000.
		The dividend revenue will be credited with $28,000
		The investment revenue will be credited with $77,000

4)

Grant, Inc. acquired 30 percent of South Co.'s voting stock for $200,000 on January 2, 20X4. Grant's 30 percent interest in South gave Grant the ability to exercise significant influence over South's operating and financial policies. During 20X4, South earned $80,000 and paid dividends of $50,000. South reported earnings of $100,000 for the six months ended June 30, 20X5, and $200,000 for the year ended December 31, 20X5. On July 1, 20X5, Grant sold half of its stock in South for $150,000 cash. South paid dividends of $60,000 on October 1, 20X5.

In its 20X5 income statement, what amount should Grant report as a gain from the sale of half of its investment?

		$35,000
		$24,500
		$30,500
		$45,500