Upstream and downstream sales
Pat Corporation owns 70 percent of Sue Company’s common stock, acquired January 1, 2012. Patents from the investment are being amortized at a rate of $20,000 per year. Sue regularly sells merchandise to Pat at 150 percent of Sue’s cost. Pat’s December 31, 2012, and 2013 inventories include goods purchased intercompany of $112,500 and $33,000, respectively. The separate incomes (do not include investment income) of Pat and Sue for 2013 are summarized as follows:
|
Pat |
Sue |
|
|
Sales |
$1,200,000 |
$800,000 |
|
Cost of sales |
(600,000) |
(500,000) |
|
Other expenses |
(400,000) |
(100,000 ) |
|
Separate incomes |
$ 200,000 |
$200,000 |
Total consolidated income should be allocated to controlling and noncontrolling interest shares in the amounts of:
a $344,550 and $61,950, respectively
b $358,550 and $60,000, respectively
c $346,500 and $60,000, respectively
d $346,500 and $67,950, respectively