Use the following facts for Multiple Choice problems $18-20.$ Each $of$ the problems $is$ independent $of$

the other.

Assume a parent company owns $a100\%$ controlling interest $in$ its long$-$held subsidiary. The following

excerpts are from the parent's and subsidiary's "stand alone" pre$-$consolidation income statements for the

year ending December $31,2022,$ prior $to$ any investment bookkeeping $or$ intercompany adjustments:

$On$ January $1,2022,$ neither company held any inventories purchased from the other affiliate. All $of$ the sales

made $by$ either company have the same gross margin regardless $of$ whether they are made $to$ affiliates $or$

non$-$affiliates. The subsidiary declared and paid $$260,000of$ dividends during $2022.$

$LO220.$ Pre$-$consolidation bookkeeping, upstream intercompany sales, profits $in$ ending inventory$-$Cost

method

Assume during the year ended December $31,2022,$ a subsidiary ${?}_{(}()pg.250)of$ its parent $$520,000of$ mer$-$

chandise. $At$ December $31,2022,$ the parent still held $in$ its inventory $25\%of$ the goods purchased from

the subsidiary during $2022.$ What $is$ the amount $of$ "income from subsidiary" recognized $by$ the parent

company $ifit$ applies the cost method $of$ pre$-$consolidation investment bookkeeping?

$a.$ $$463,450$

$c.$ $$260,000$

$b.$ $$460,200$

$d.$ $$208\mathrm{.}000$