P CO owns a 90% interest in S Co, purchased at a time when the book values of S recorded assets and liabilities were equal to fair values. During 2014, S sold merchandise to P cost 32,000 for $40,000 . At December 31, 2014, 75% of this merchandise sold to third party . Separate incomes for P&S are summarized as follows: P S Sales $900,000 $200,000 Cost of sales 400,000 100,000 Gross profit 500,000 100,000 Operating expenses 200,000 80,000 Separate income $300,000 $ 20,000 What is amount of realized income from intercompany sales? Select one: a. 6,000 loss b. 2,000 loss c. 6,000 profit d. 2,000 profit

P CO owns a 90% interest in S Co, purchased at a time when the book values of S recorded assets and liabilities were equal to fair values. During 2014, S sold merchandise to P cost 32,000 for $40,000 . At December 31, 2014, 75% of this merchandise sold to third party . Separate incomes for P&S are summarized as follows: P S Sales $900,000 $200,000 Cost of sales 400,000 100,000 Gross profit 500,000 100,000 Operating expenses 200,000 80,000 Separate income $300,000 $ 20,000 What is amount of realized income from intercompany sales? Select one: a. 6,000 loss b. 2,000 loss c. 6,000 profit d. 2,000 profit

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 28E

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