q.24

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, three-fourths of the merchandise acquired from P remained in S inventory. 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

The consolidated income statement for P Corporation and subsidiary for the year ended December 31, 2014 will show consolidated sales Revenue of

Select one:

a. $270,000

b. $ 340,000

c. $260,000

d. $254,000