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

-What was the net income attributable to the noncontrolling interest, assuming that the separate return method was used to assign the income tax expense?

-Compute Whitton's accrual-based consolidated net income for 2018.

Assuming that separate income tax returns are being filed, what deferred income tax asset is created?

Which of the following is true concerning the treasury stock approach in accounting for a subsidiary's investment in parent company stock?

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 false concerning a father-son-grandson configuration?

What configuration of corporate ownership is described as a father-son-grandson relationship?

Jastoon Co.acquired all of Wedner Co.for $588,000 cash in a tax-free transaction.On that date, the subsidiary had net assets with a $560,000 fair value but a $420,000 book value and income tax basis.The income tax rate was 30%.What amount of goodwill should have been recognized on the date of the acquisition?

-Compute accrual-based consolidated income before income tax.

Wilkins Inc.owned 60% of Motumbo Co.During the current year, Motumbo reported net income of $280,000 but paid a total cash dividend of only $56,000. Required: Assuming an income tax rate of 30%, what amount of Deferred Income Tax Liability arising this year must be recognized in the consolidated balance sheet?

What is consolidated net income?

-Under the separate return method, income tax expense that will be assigned to Hill is closest to:

-What amount should be reported for consolidated net income?

Assuming that a consolidated income tax return is being filed, what deferred income tax asset is created?

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 Cody's undistributed earnings for 2018.

On January 1, 2018, a subsidiary buys 8 percent of the outstanding voting stock of its parent corporation.The payment of $350,000 exceeded book value of the acquired shares by $50,000, attributable to a copyright with a 10-year useful life.During the year, the parent reported operating income of $675,000 (excluding investment income from the subsidiary), and paid $100,000 in dividends.If the treasury stock approach is used, how is the Investment in Parent Stock reported in the consolidated balance sheet at December 31, 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: -Compute Chase's attributed ownership in Ross.

What is net income attributable to the controlling interest of Paris?

-What is Sigma's accrual-based 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: -The benefits of filing a consolidated tax return include all of the following except

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: -Compute the net income attributable to the noncontrolling interest in Ross for 2018.