Peregrine Corporation acquired an 80% interest in Serine Corporation in 2011 at a time when Serine's book values and fair values were equal to one another. On January 1, 2014, Serine sold a truck with a $55,000 book value to Peregrine for $100,000. Peregrine is depreciating the truck over 10 years using the straight-line method. The truck has no salvage value. Separate incomes for Peregrine and Serine for 2014 were as follows: Peregrine Serine Sales $1,800,000 $1,050,000 Gain on sale of truck 45,000 Cost of Goods Sold (750,000) (285,000) Depreciation expense (450,000) (135,000) Other expenses (180,000) (450,000) Separate incomes $ 420,000 $ 225,000 Peregrine's investment income from Serine for 2014 was A. $144,000. B. $180,000. C. $108,000. D. $147,600.
Peregrine Corporation acquired an 80% interest in Serine Corporation in 2011 at a time when Serine's book values and fair values were equal to one another. On January 1, 2014, Serine sold a truck with a $55,000 book value to Peregrine for $100,000. Peregrine is
Peregrine Serine
Sales $1,800,000 $1,050,000
Gain on sale of truck 45,000
Cost of Goods Sold (750,000) (285,000)
Depreciation expense (450,000) (135,000)
Other expenses (180,000) (450,000)
Separate incomes $ 420,000 $ 225,000
Peregrine's investment income from Serine for 2014 was
| A. |
$144,000. |
|
| B. |
$180,000. |
|
| C. |
$108,000. |
|
| D. |
$147,600. |
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