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

question 13

Multiple Choice

Use the following information to answer the question(s) below.
Pouch Corporation acquired an 80% interest in Shenley Corporation on January 1,2012,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 2012,Pouch sold merchandise that cost $70,000 to Shenley for $86,000.On December 31,2012,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:

-The consolidated income statement for Pouch Corporation and subsidiary for the year ended December 31,2012 will show consolidated cost of sales of

• A)$120,000.
• B)$136,000.
• C)$148,000.
• D)$210,000.

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