During 2017, Pop Corporation owns 20 percent of Son Corporation's preferred stock and 80 percent of its common stock. Son's stock outstanding on December 31, 2017, is as follows:
10% cumulative preferred stock .............. $ 400,000
Common stock ................................. 2,800,000
1. Son reported net income of $240,000 for the year ended December 31, 2017. What amount should Pop record as equity in earnings of Son for the year ended December 31, 2017?
a. $168,000
b. $192,000
c. $193,600
d. $200,000
2. Pop Corporation uses the equity method to account for its 25% investment in Son Corporation. During 2016, Pop received dividends of $60,000 from Son and recorded $360,000 as its equity in the earnings of Son. Additional information follows:
€¢ The dividends received from Son are eligible for the 80 percent dividends-received deduction.
€¢ There are no other temporary differences.
€¢ Enacted income tax rates are 30 percent for 2016 and thereafter.
In its December 31, 2016, balance sheet, what amount should Pop report for deferred income tax liability?
a. $18,000
b. $21,600
c. $90,000
d. $108,000
3. In 2016, Pop Corporation received $600,000 in dividends from Son Corporation, its 80 percent-owned subsidiary. What net amount of dividend income should Pop include in its 2016 consolidated tax return?
a. $600,000
b. $480,000
c. $420,000
d. $0
4. Pop Corporation and Son Corporation filed consolidated tax returns. In January 2016, Pop sold land, with a basis of $120,000 and a fair value of $150,000, to Son for $200,000. Son sold the land in December 2017 for $250,000. In its 2017 and 2016 tax returns, what amount of gain should be reported for these transactions in the consolidated return?

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2017 2016 $50,000 $80,000 0 $100,000$50,000 0 $100,000 $130,000