Pisa Company owns 75
Chapter2: Income Tax Concepts
Section: Chapter Questions
Problem 24P
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Transcribed Image Text:Pisa Company owns 75 percent of the stock of Siena Company on January 1, 20X3. During 20X3, Siena purchased inventory for $35,000 and sold it to Pisa for $50,000. Of this
amount, Pisa reported $20,000 in ending inventory in 20X3 and later sold it in 20X4. In 20X4, Pisa sold inventory it had purchased for $40,000 to Siena for $60,000. Siena sold
$45,000 of this inventory in 20X4. Assume Siena reported net income of $200,000 for 20X4, the amount Pisa will report as Income from Siena Company for year 20X4 would be:
O $152,250.
$149,500.
$151,000.
O $150,000.
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