Question
Phelps Co. uses the sophisticated equity method to account for the 80% investment in its subsidiary Shore Corp. At the time of the acquisition, the
Phelps Co. uses the sophisticated equity method to account for the 80% investment in its subsidiary Shore Corp. At the time of the acquisition, the fair values of the net asset required approximated their book values. During the year, Shore sells inventory to Phelps. Based upon the following information, what is consolidated net income?
| Phelps internally generated income: | $250,000 |
| Shore internally generated income: | $ 50,000 |
| Intercompany profit in beginning inventory purchased from Shore: | $ 10,000 |
| Intercompany profit in ending inventory purchased from Shore: | $ 15,000 |
| a. | $300,000 |
| b. | $295,000 |
| c. | $286,000 |
| d. | $305,000 |
Show your work please
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Advanced Project Management A Structured Approach
Authors: Frederick Harrison, Dennis Lock
4th Edition
1138270636, 978-1138270633
