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

Use the following to answer questions 68 - 74: -What is the net income attributable to the noncontrolling interest in Pi for 2018?

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

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

Use the following to answer questions 1 - 3: Buckette Co. owned 60% of Shuvelle Corp. and 40% of Tayle Corp., and Shuvelle owned 35% of Tayle. -What is this pattern of ownership called?

Use the following to answer questions 68 - 74: -What is the net income attributable to the noncontrolling interest in Sigma for 2018?

Alpha Corporation owns 100 percent of Beta Company, and Beta owns 80 percent of Gamma, Inc., all of which are domestic corporations. There were no excess allocation values at the date of acquisition of the subsidiaries. Information for the three companies for the year ending December 31, 2018 follows: -What is the total net income attributable to the noncontrolling interests for 2018?

Dog Corporation acquires all of Cat, Inc.for $400,000 cash.On that date, Cat has net assets with fair value of $350,000 but a book value and tax basis of $325,000.The tax rate is 30 percent.Prior to this date, neither Dog nor Cat has reported any deferred income tax assets or liabilities.What amount of goodwill should be recognized on the date of the acquisition?

West Corp. owns 70% of the voting common stock of East Co. East owns 60% of Compass Co. West and East both use the initial value method to account for their investments. The following information is available from the financial statements and records of the three companies: Separate company net income includes intra-entity gains before the consolidating deferral but does not include dividend income from investment in subsidiary. -What amount should be reported for consolidated net income?

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

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 net income attributable to the noncontrolling interest of Jade Co.is calculated to be

Chase Company owns 80% of Lawrence Company and 40% of Ross Company. Lawrence Company also owns 30% of Ross Company. Separate company net incomes for 2018 of Chase, Lawrence, and Ross are $450,000, $300,000, and $250,000, respectively. Each company also defers a $20,000 intra-entity gain in its current income figures. Excess annual amortization expense of $15,000 is assigned to Chase's investment in Lawrence and another $15,000 is assigned to Lawrence's investment in Ross. -Compute Chase's attributed ownership in Ross.

What are the essential criteria for including a subsidiary within an affiliated group?

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 -Woods Company has one depreciable asset valued at $800,000.Because of recent losses, the company has a net operating loss carryforward of $150,000.The tax rate is 30%.The company was acquired for $1,000,000.It is more likely than not that the tax benefit will be realized.Compute the goodwill recognized for consolidated financial statements.

Which of the following is not an advantage of filing a consolidated income tax return?

Use the following to answer questions 68 - 74: -What is Sigma's accrual-based income for 2018?

Tower Company owns 85% of Hill Company. The two companies engaged in several intra-entity transactions. There were no excess fair-value amortization amounts to account for. Each company's income before income tax and dividend income for the current time period follow, as well as the effects of intra-entity gross profits on remaining inventory which are included in the separate net income amounts. No income tax accruals have been recognized within these totals. The tax rate for each company is 30%. -What is the income tax liability for the current year if consolidated tax returns are prepared?

Tower Company owns 85% of Hill Company. The two companies engaged in several intra-entity transactions. There were no excess fair-value amortization amounts to account for. Each company's income before income tax and dividend income for the current time period follow, as well as the effects of intra-entity gross profits on remaining inventory which are included in the separate net income amounts. No income tax accruals have been recognized within these totals. The tax rate for each company is 30%. -Under the separate return method, income tax expense that will be assigned to Hill is closest to:

West Corp. owns 70% of the voting common stock of East Co. East owns 60% of Compass Co. West and East both use the initial value method to account for their investments. The following information is available from the financial statements and records of the three companies: Separate company net income includes intra-entity gains before the consolidating deferral but does not include dividend income from investment in subsidiary. -The accrual-based net income of West Corp.is calculated to be

Which of the following statements is true regarding mutual ownership between a parent and its subsidiary?