Exam 7: Consolidated Financial Statements - Ownership Patterns and Income Taxes

White Company owns 60% of Cody Company. Separate tax returns are required. For 2017, White's operating income (excluding taxes and any income from Cody) was $300,000 while Cody reported a pretax income of $125,000. During the period, Cody declared total dividends of $25,000; $15,000 (60%) to White and $10,000 to the noncontrolling interest. White declared dividends of $180,000. The income tax rate for both companies is 30%. -Compute White's deferred income taxes for 2018.

On January 1, 2018, a subsidiary bought 10% of the outstanding shares of its parent company.Although the total book value and fair value of the parent's net assets were $5.5 million, the consideration transferred for these shares was $590,000.During 2018, the parent reported separate net income of $714,000, before including investment income, while dividends declared were $196,000.How were these shares reported at December 31, 2018?

-Using the percentage allocation method for assigning income tax expense, the income tax expense assigned to Hill is closest to:

Pear, Inc.owns 80 percent of Apple Corporation.During the current year, Apple reported operating income before tax of $400,000 and paid a dividend of $120,000.The income tax rate for each company is 40 percent and separate tax returns are prepared.What deferred income tax liability arising this year must be recognized in the consolidated balance sheet?

Compute Chase's accrual-based net income for 2018.

Required: Using the treasury stock approach, prepare a schedule to show what is reported as the net income attributable to the noncontrolling interest in Luvyn.

Horse Corporation acquires all of Pony, Inc.for $300,000 cash.On that date, Pony has net assets with fair value of $250,000 but a book value and tax basis of $200,000.The tax rate is 40 percent.Prior to this date, neither Horse nor Pony has reported any deferred income tax assets or liabilities.What amount of goodwill should be recognized on the date of the acquisition?

On a consolidated income statement, what is the net income attributable to the noncontrolling interest?

Required: Prepare a schedule to show net income attributable to the controlling interest of Kurton.

What amount of dividends should West Corp.recognize in its consolidated net income with respect to dividends received from Compass Co.?

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 net income figures (without investment income) as well as upstream intra-entity gross profits (before deferral) included in the income for the current year follow: -Which of the following statements is true regarding the filing of income taxes for an affiliated group?

Gamma Co.owns 80% of Delta Corp., and Delta Corp.owns 15% of Gamma Co.The two companies use the treasury stock approach to account for mutual ownership.How should Delta Corp.'s ownership interest in Gamma Co.be accounted for in the consolidation?

What will be reported as the net income attributable to the noncontrolling interest of Stance?

T Corp.owns several subsidiaries that are eligible for inclusion on a consolidated income tax return, but T Corp.decided that each company in the group will file a separate return.Under what conditions would there be minimal advantage in filing a consolidated income tax return?

What method is used in consolidation to account for a subsidiary's ownership of shares of its parent corporation?

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

Required: Under the treasury stock approach, what is Jull's net income attributable to the controlling interest in Solaver Co..?

Compute Lawrence's accrual-based net income for 2018.

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 net income figures (without investment income) as well as upstream intra-entity gross profits (before deferral) included in the income for the current year follow: -When indirect control is present, which of the following statements is true?

-What is the total net income attributable to the noncontrolling interest for 2018?