(Solution Download) 1 During 2012 Pin Corporation owns 20 percent of Sob

1. During 2012, Pin Corporation owns 20 percent of Sob Corporation's preferred stock and 80 percent of its common stock. Sob's stock outstanding on December 31, 2012, is as follows:
10% cumulative preferred stock .................. $ 200,000
Common stock ...................................... 1,400,000
Sob reported net income of $120,000 for the year ended December 31, 2012. What amount should Pin record as equity in earnings of Sob for the year ended December 31, 2012?
a. $84,000
b. $96,000
c. $96,800
d. $100,000
2. Pat Corporation uses the equity method to account for its 25% investment in Sam, Inc. During 2011, Pat received dividends of $30,000 from Sam and recorded $180,000 as its equity in the earnings of Sam. Additional information follows:
? The dividends received from Sam are eligible for the 80 percent dividends-received deduction.
? There are no other temporary differences.
? Enacted income tax rates are 30 percent for 2011 and thereafter.
In its December 31, 2011, balance sheet, what amount should Pat report for deferred income tax liability?
a. $9,000
b. $10,800
c. $45,000
d. $54,000
3. In 2011, Pal Corporation received $300,000 in dividends from Sal Corporation, its 80 percent owned subsidiary. What net amount of dividend income should Pal include in its 2011 consolidated tax return?
a. $300,000
b. $240,000
c. $210,000
d. $0
4. Pot Corporation and Sly Corporation filed consolidated tax returns. In January 2011, Pot sold land, with a basis of $60,000 and a fair value of $75,000, to Sly for $100,000. Sly sold the land in December 2012 for $125,000. In its 2012 and 2011 tax returns, what amount of gain should be reported for these transactions in the consolidated return?
2012 2011
a ......................... $25,000 ................. $40,000
b ........................ $50,000 ......................... 0
c ........................ $50,000 ................. $25,000
d ........................ $65,000 ......................... 0