### Consolidated Financial Statements: Income Analysis#### Overview: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 that cost $40,000 for $32,000. As of December 31, 2014, 75% of this merchandise sold to a third party. Below is the summary of separate incomes for P and S:#### Income Summary:**P CO:**- **Sales:** $900,000- **Cost of sales:** $400,000- **Gross profit:** $500,000- **Operating expenses:** $200,000- **Separate income:** $300,000**S CO:**- **Sales:** $200,000- **Cost of sales:** $100,000- **Gross profit:** $100,000- **Operating expenses:** $80,000- **Separate income:** $20,000#### Question:What is the amount of income from S reported in P’s income statement?**Options:**- a. $19,800- b. $18,000- c. $20,000- d. $16,200Select the correct option from the choices given.---This information is designed to provide insights into financial accounting and consolidation practices for educational purposes.

In case of intercompany sales, unrealised profits needs to be allocated between controlling interest…

P CO owns a 90% interest in S Co, purchased at a time when the book values of S recorded assets and Iliabilities 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: 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 amount of income from s reported in P income statement ? $300,000 $ 20,000 What is Select one: a. 19,800 b. 18,000 c. 20,000 d. 16,200

P CO owns a 90% interest in S Co, purchased at a time when the book values of S recorded assets and Iliabilities 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: 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 amount of income from s reported in P income statement ? $300,000 $ 20,000 What is Select one: a. 19,800 b. 18,000 c. 20,000 d. 16,200

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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