in

. The accrual-basednet income of Beagle Co. is calculated to be

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:

What do you think?

Written by Homework Lance

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings

Consolidated Financial Statements – Ownership Patterns and Income Taxes

The accrual-based net income of Jade Co. is calculated to be