P Company Owns an 80% Interest in S Company

question 5

Multiple Choice

P Company owns an 80% interest in S Company.During 2017,S sells merchandise to P for $150,000 at a profit of $30,000.On December 31,2017,50% of this merchandise is included in P's inventory.Income statements for P and S are summarized below: Controlling interest in consolidated net income for 2017 is:

• A)$225,000.
• B)$285,000.
• C)$297,000.
• D)$315,000.

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Definitions:

Opportunity Cost

The consequence of forfeiting potential gains in other options by deciding on one.

Professional Team

A group of individuals with specialized skills and expertise working together in a coordinated manner towards common professional goals.

Opportunity Cost

The cost of missing out on potential benefits from other alternatives when making a choice.

Forgone Current Income

The income an individual or entity could have earned but chose to forego for pursuing an alternative.