1) P Company owns an 80% interest in S Company. During 2017, S sells merchandise to P for $200,000 at a profit of $40,000. On December 31, 2017, 50% of this merchandise is included in P’s inventory. Income statements for P and S are summarized below:

	P		S
Sales	$1,200,000		$600,000
Cost of Sales	(600,000)		(400,000)
Operating Expenses	(300,000)		(80,000)
Net Income (2017)	$300,000		$120,000

Controlling and non-controlling interest in consolidated net income for 2017?

2)

P Corporation acquired a 60% interest in S Corporation on January 1, 2017, at book value equal to fair value. During 2017, P sold merchandise that cost $225,000 to S for $315,000. One-third of this merchandise remained in S’s inventory at December 31, 2017. S reported net income of $200,000 for 2017. P’s income from S for 2017 is:

a) $60,000.

b) $90,000.

c) $120,000.

d) $102,000.

3)P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2016, P sold merchandise that cost $192,000 to S for $240,000. Half of this merchandise remained in S’s December 31, 2016 inventory. During 2017, P sold merchandise that cost $300,000 to S for $375,000. Forty percent of this merchandise inventory remained in S’s December 31, 2017 inventory. Selected income statement information for the two affiliates for the year 2017 is as follows:

	P		S
Sales Revenue	$1,800,000		$900,000
Cost of Goods Sold	1,440,000		750,000
Gross profit	$ 360,000		$150,000

??? ??

Consolidated sales revenue for P and Subsidiary for 2017 are:

a) $2,325,000.

b) $2,400,000.

c) $2,565,000.

d) $2,700,000.

And also

Consolidated cost of goods sold for P Company and Subsidiary for 2017 are:

a) $1,809,000.

b) $1,815,000.

c) $1,821,000.

d) $2,190,000.

4) P Company owns an 80% interest in S Company. During 2017, S sells merchandise to P for $150,000 at a profit of $30,000. On December 31, 2017, 50% of this merchandise is included in P’s inventory. Income statements for P and S are summarized below:

	P		S
Sales	$900,000		$450,000
Cost of Sales	(450,000)		(300,000)
Operating Expenses	(225,000)		( 60,000)
Net Income (2017)	$225,000		$ 90,000

Controlling interest in consolidated net income for 2017 is:

a) $225,000.

b) $285,000.

c) $297,000.

d) $315,000.

Noncontrolling interest in income for 2017 is:

a) $3,000.

b) $14,400.

c) $15,000.

d) $18,000.

Answer rating: 100% (QA)

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