E5-3 Downstream sales 1. The separa $2.000,000 and $1,000,000, respectively. ration and Sil Corporation, a 100 percent-owned subsidiary of Pl, for 2012 are Pil sells all of its output to Sil at 150 percent of Pil's cost of production. 2011 and 2012, Pil's sales to Sil were $9,000,000 and $7,000,000, respectively. Sil's inventory at Decem- er31, 2011, included $3,000,000 of the merchandise acquired from Pil, and its December 31,2012, inventory $2,400,000 of such merchandise. Assume Sil sells the inventory purchased from Pil in the following year A consolidated income statement for Pil Corporation and Subsidiary for 2012 should show controling interest share of consolidated net income of a $2,200,000 b $2,800,000 c $3,000,000 d $3,200,000 USE THE FOLLOWING INFORMATION IN ANSWERING QUESTIONS 2 AND 3: Pan Corporation owns 75 percent of the voting common stock of Sat Corporation, acquired at book value dur- ing 201 1. Selected information from the accounts of Pan and Sat for 2012 are as follows Pan Sat Sales Cost of sales $1,800,000 $1,000,000 980,000 380,000 During 2012 Pan sold merchandise to Sat for $100,000, at a gross profit to Pan of $40,000. H chandise remained in Sat's inventory at nrealized profit of $8,000 on goods acquired from Pan. lf of this mer- December 31, 2012. Sat's December 31,2011, inventory included E5-3 Downstream sales 1. The separa $2.000,000 and $1,000,000, respectively. ration and Sil Corporation, a 100 percent-owned subsidiary of Pl, for 2012 are Pil sells all of its output to Sil at 150 percent of Pil's cost of production. 2011 and 2012, Pil's sales to Sil were $9,000,000 and $7,000,000, respectively. Sil's inventory at Decem- er31, 2011, included $3,000,000 of the merchandise acquired from Pil, and its December 31,2012, inventory $2,400,000 of such merchandise. Assume Sil sells the inventory purchased from Pil in the following year A consolidated income statement for Pil Corporation and Subsidiary for 2012 should show controling interest share of consolidated net income of a $2,200,000 b $2,800,000 c $3,000,000 d $3,200,000 USE THE FOLLOWING INFORMATION IN ANSWERING QUESTIONS 2 AND 3: Pan Corporation owns 75 percent of the voting common stock of Sat Corporation, acquired at book value dur- ing 201 1. Selected information from the accounts of Pan and Sat for 2012 are as follows Pan Sat Sales Cost of sales $1,800,000 $1,000,000 980,000 380,000 During 2012 Pan sold merchandise to Sat for $100,000, at a gross profit to Pan of $40,000. H chandise remained in Sat's inventory at nrealized profit of $8,000 on goods acquired from Pan. lf of this mer- December 31, 2012. Sat's December 31,2011, inventory included