Question
30 P Corporation acquired an 80% interest in S Corporation on January 1, 2014, when the book values of S assets and liabilities were equal
30 P Corporation acquired an 80% interest in S Corporation on January 1, 2014, when the book values of S assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of S net assets. During 2014, P sold merchandise that cost $70,000 to S for $86,000. On December 31, 2014, all of the merchandise acquired from P Sold to third party . Separate incomes (investment income not included) of the two companies are as follows:
P S
Sales Revenue 180,000 160,000
Cost of Goods Sold 120,000 90,000
Operating Expenses 17,000 21,000
Separate incomes 43,000 49,000
What is P income from S for 2014?
Select one: a. $49,000 b. $39,200 c. $29,600 d. $ 27,200
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