P Company acquired an 80% interest in S Company on January 1, 2011, for an amount equal to book value. S Company sold land to P Company in 2011 at a profit of P5,000. The land is held by the buying affiliate firm until 2013, when it is sold to an unaffiliated party for a profit of P6,000. S Company reported net income for 2011, 2012, and 2013 of P30,000, P40,000 and P50,000, respectively. 1. The parent’s investment income for 2011 would be: 2. The 2013 consolidated income statement would reflect a gain on sale of land in the amount of 3. The WPEE on December 31, 2013, concerning the intercompany sale of land would include:

P Company acquired an 80% interest in S Company on January 1, 2011, for an amount equal to book value. S Company sold land to P Company in 2011 at a profit of P5,000. The land is held by the buying affiliate firm until 2013, when it is sold to an unaffiliated party for a profit of P6,000. S Company reported net income for 2011, 2012, and 2013 of P30,000, P40,000 and P50,000, respectively. 1. The parent’s investment income for 2011 would be: 2. The 2013 consolidated income statement would reflect a gain on sale of land in the amount of 3. The WPEE on December 31, 2013, concerning the intercompany sale of land would include:

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter7: Corporations: Reorganizations

Section: Chapter Questions

Problem 42P

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