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

question 4

Multiple Choice

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

Paggle Corporation owns 80% of Spillway Inc.'s common stock that was purchased at its underlying book value. At the time of purchase, the book value and fair value of Spillway's net assets were equal. The two companies report the following information for 2014 and 2015.

During 2014, one company sold inventory to the other company for $50,000 which cost the transferor $40,000. As of the end of 2014, 30% of the inventory was unsold. In 2015, the remaining inventory was resold outside the consolidated entity.

-For 2014,consolidated net income will be what amount if the intercompany sale was downstream?

• A)$180,000
• B)$253,000
• C)$256,000
• D)$259,000

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Definitions:

B. F. Skinner

An American psychologist known for his work in behaviorism and the development of the operant conditioning theory.

Reinforcement Unit

A measure or instance of reinforcement, which can be positive or negative, used to increase the likelihood of a desired response or behavior.

Primary Reinforcer

A stimulus that is naturally rewarding and satisfies a basic biological need, such as food, water, or sleep.

Food

Any nutritious substance that people or animals eat or drink to maintain life and growth.