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Phelps Co. uses the sophisticated equity method to account for the 80% investment in its subsidiary Shore Corp. At the time of the acquisition, the fair values of the net asset required approximated their book values.  Based upon the following information, what is consolidated net income? Phelps internally generated income: $250,000 Shore internally generated income: $  50,000 Intercompany profit on Shore beginning inventory: $  10,000 Intercompany profit on Shore ending inventory: $  15,000   a. $300,000 b. $295,000 c. $286,000 d. $305,000

Phelps Co. uses the sophisticated equity method to account for the 80% investment in its subsidiary Shore Corp. At the time of the acquisition, the fair values of the net asset required approximated their book values.  Based upon the following information, what is consolidated net income? Phelps internally generated income: $250,000 Shore internally generated income: $  50,000 Intercompany profit on Shore beginning inventory: $  10,000 Intercompany profit on Shore ending inventory: $  15,000   a. $300,000 b. $295,000 c. $286,000 d. $305,000

FINANCIAL ACCOUNTING
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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Phelps Co. uses the sophisticated equity method to account for the 80% investment in its subsidiary Shore Corp. At the time of the acquisition, the fair values of the net asset required approximated their book values.  Based upon the following information, what is consolidated net income?

Phelps internally generated income:

$250,000

Shore internally generated income:

$  50,000

Intercompany profit on Shore beginning inventory:

$  10,000

Intercompany profit on Shore ending inventory:

$  15,000

 

a.

$300,000

b.

$295,000

c.

$286,000

d.

$305,000
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