On January 1, 2015, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $360,000 in cash. The equipment had originally cost $340,000 but had a book value of only $260,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method.
Ackerman earned $460,000 in net income in 2015 (not including any investment income) while Brannigan reported $114,000. Ackerman attributed any excess acquisition-date fair value to Brannigan?s unpatented technology, which was amortized at a rate of $6,000 per year.
a.What is the consolidated net income for 2015?
b. What is the parent?s share of consolidated net income for 2015 if Ackerman owns only 90 percent of Brannigan?
c. What is the parent?s share of consolidated net income for 2015 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream?
d. What is the consolidated net income for 2016 if Ackerman reports $480,000 (does not include investment income) and Brannigan $124,000 in income? Assume that Brannigan is a wholly owned subsidiary and the equipment transfer was downstream.
Investment in Subsidiary arise when a company obtains control over another company, Companies under this kind of investment are not allowed to have transactions with each other such as buy and sell transaction.
Answer and Explanation:
|Net Income - Parent||460,000|
|Net Income- Subsidiary||114,000|
See full answer below.
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
fromChapter 3 / Lesson 3