Anderson Company, a 90% Owned Subsidiary of Philbin Corporation, Transfers

question 126

Multiple Choice

Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin's intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020. Assume the equity method is used. The following data are available pertaining to Anderson's income and dividends. Compute the equity in earnings of Anderson reported on Philbin's books for 2020.

• A) $63,000.
• B) $62,730.
• C) $63,270.
• D) $70,000.
• E) $62,700.