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

question 26

Multiple Choice

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 2011,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 2011 were as follows:

-What is Pew's income from Sordid for 2011?

• A)$32,000
• B)$48,000
• C)$60,000
• D)$75,000

---

Definitions:

Throw Rugs

Small, movable carpets that can be placed in various locations in a home for decoration or comfort.

Handrails

Safety devices installed alongside stairs, ramps, and other potentially unstable or elevated surfaces to prevent falls and provide support.

Soft Dry Cloth

A textile material that is both smooth to the touch and free of moisture, typically used for cleaning or drying surfaces.