Use the following information to answer the question(s) below.

Pew Corporation acquired 80% ownership of Sordid Incorporated, at a time when Pew's investment cost was equal to 80% of Sordid's book value. At the time of acquisition, the book values and fair values of Sordid's assets and liabilities were equal. Pew uses the equity method. During 2014, Pew sold goods to Sordid for $160,000 making a gross profit percentage of 20%. Half of these goods remained unsold in Sordid's inventory at the end of the year. Income statement information for Pew and Sordid for 2014 were as follows:

-What is Pew's income from Sordid for 2014?
A)$32,000
B)$48,000
C)$60,000
D)$75,000

Question

Use the following information to answer the question(s) below.

Pew Corporation acquired 80% ownership of Sordid Incorporated, at a time when Pew's investment cost was equal to 80% of Sordid's book value.  At the time of acquisition, the book values and fair values of Sordid's assets and liabilities were equal. Pew uses the equity method. During 2014, Pew sold goods to Sordid for $160,000 making a gross profit percentage of 20%. Half of these goods remained unsold in Sordid's inventory at the end of the year. Income statement information for Pew and Sordid for 2014 were as follows:

-What is Pew's income from Sordid for 2014?
A)$32,000 
B)$48,000 
C)$60,000 
D)$75,000

Quizplus · Accepted Answer

Pew's income from Sordid for 2014 is $32,000. This is determined based on the specific details provided in the question or data related to Pew's earnings from Sordid in that year.

Use the Following Information to Answer the Question(s) Below