A) $706,670.
B) $755,980.
C) $805,280.
D) $838,150.
E) $815,770.
Answer: C
Learning Objective: 07-01
Topic: Consolidation―Grandfather-Father-Son
Difficulty: 2 Medium
Blooms: Apply
AACSB: Knowledge Application
AICPA: BB Critical Thinking
AICPA: FN Measurement
Feedback:
Separate company net income before investment income—Beagle Co.
$420,000
Equity income accruing from Maroon Corp.—80% of $481,600 (see below)
385,280
Accrual-based net income of Beagle Co.
$805,280
Separate company net income before investment income—Maroon Corp.
$280,000
Equity income accruing from Eckston Inc.:
Eckston’s separate net income
$280,000
Deferral of Eckston’s intra-entity gross profit
(56,000)
Eckstons’s accrual-based net income
$224,000
Maroon’s percentage ownership of Eckston
90%
Maroon’s share of Eckston’s net income
201,600
Accrual-based net income of Maroon
$481,600
Use the following to answer questions 23 – 25:
REFERENCE: 07-06
Hardford Corp. held 80% of Inglestone Inc., which, in turn, owned 80% of Jade Co. Excess amortization expense was not required by any of these acquisitions.Separate netincome figures (without investment income) as well as upstream intra-entity gross profits(before deferral) included in the income for the current year follow:
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