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

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Definitions:

Mass Affluent

Individuals with a significant amount of disposable income, though not wealthy by traditional standards, making them a target for certain luxury goods and financial services.

80/20 Rule

A theory that suggests that 20 percent of heavy users account for 80 percent of the total demand.

Heavy Users

Consumers who use or purchase a product or service much more frequently than average users.

VALS Framework

A psychographic segmentation tool used to categorize consumers into eight distinct types based on their lifestyles, attitudes, and values.