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

question 45

Multiple Choice

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

Pouch Corporation acquired an 80% interest in Shenley Corporation on January 1, 2014, when the book values of Shenley's assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of Shenley's net assets. During 2014, Pouch sold merchandise that cost $70,000 to Shenley for $86,000. On December 31, 2014, three-fourths of the merchandise acquired from Pouch remained in Shenley's inventory. Separate incomes (investment income not included) of the two companies are as follows:


-What is Pouch's income from Shenley for 2014?

• A)$27,200
• B)$29,600
• C)$39,200
• D)$49,000