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, p sold merchandise to S cost 40,000 for $32,000 . 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 unrealized income from intercompany sales? Select one: a. 6,000 loss b. 6,000 profit c. 2,000 loss 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, p sold merchandise to S cost 40,000 for $32,000 . 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 unrealized income from intercompany sales? Select one: a. 6,000 loss b. 6,000 profit c. 2,000 loss d. 2,000 profit
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 35P
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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, p sold merchandise to S cost 40,000 for $32,000 . 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 unrealized income from intercompany sales?
Select one:
a. 6,000 loss
b. 6,000 profit
c. 2,000 loss
d. 2,000 profit
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