BACKGROUND

P Corporation acquired 80% of S Companys common stock for $22,200 on 1/1/20X3. The reported equity of S on 1/1/20X3 was $7,000. Ss assets and liabilities were reported at fair value at the date of acquisition except for previously unrecorded identifiable intangibles of $3,000; this amount was amortized at the rate of $500 per year. Unless indicated/suggested/assumed otherwise, there were no impairments of Goodwill. Also, unless indicated/suggested/assumed otherwise, the total fair market value of Ss net assets was $10,000 while the fair value of the 20% non-controlling interest was $7,800. P has employed the Complete Equity Method properly since the acquisition of S.

Other information follows:

1. On 1/2/20X3, P sold S land for a price of $1,000. The land had a book value of $400 at the time of sale.

2. S sells merchandise to P on a continuing basis. Ps 20X4 beginning inventory contains $30 in intercompany profits while Ps 20X4 ending inventory contains $45 in intercompany profits.

3. Ss total dividends for both 20X3 and 20X4 were $600 while Ss net income for both 20X3 and 20X4 was $5,000.

QUESTION

1. Calculate Ps Equity in the Net Income of S (i.e., Income from S) for 20X4 (using the information provided on page one, as appropriate).