P Corporation Acquired an 80% Interest in S Corporation Two

question 9

Multiple Choice

P Corporation acquired an 80% interest in S Corporation two years ago at an implied value equal to the book value of S. On January 2, 2017, S sold equipment with a five-year remaining life to P for a gain of $120,000. S reports net income of $600,000 for 2017 and pays dividends of $200,000. P's Equity from Subsidiary Income for 2017 is:

• A) $480,000.
• B) $384,000.
• C) $403,200.
• D) $576,000

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Definitions:

Moro Reflex

Arching the back, flinging out the arms and legs, and drawing them back to the chest in response to a sudden noise or change in position.

Reflex

An unlearned, stereotypical response to a stimulus.

Stereotypical Response

A predictable and oversimplified reaction based on preconceived notions about a group or situation.

Apgar Scale

A quick test performed on a newborn at 1 and 5 minutes after birth, assessing five criteria to evaluate the baby's physical condition and need for medical intervention.