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The Following Information Pertains to the Shareholdings of an Affiliated

Question 38

Multiple Choice

The following information pertains to the shareholdings of an affiliated group of companies. The respective ownership interest of each company is outlined below. A Inc.:
A Inc. owns 75% of J Inc. and 60% of G Inc.
J Inc.:
J Inc. owns 60% of D Inc. and 20% of G Inc.
G Inc.:
G Inc. owns 10% of D Inc. and 80% of Y Inc.
All intercompany investments are accounted for using the equity method.
The Net Incomes for these companies for the year ended December 31, 2020 were as follows:
 A Inc. $1,000,000 J Inc. $200,000 G Inc. $600,000 D Inc. $300,000 Y Inc. $100,000\begin{array} { | l | r | } \hline \text { A Inc. } & \$ 1,000,000 \\\hline \text { J Inc. } & \$ 200,000 \\\hline \text { G Inc. } & \$ 600,000 \\\hline \text { D Inc. } & \$ 300,000 \\\hline \text { Y Inc. } & \$ 100,000 \\\hline\end{array} Unrealized intercompany profits (pre-tax) earned by the various companies for the year ended December 31, 2020 are shown below:
G Inc. $10,000Y Inc. $10,000J Inc. $20,000\begin{array} { | l | l | } \hline G \text { Inc. } & \$ 10,000 \\\hline Y \text { Inc. } & \$ 10,000 \\\hline J\text { Inc. } & \$ 20,000 \\\hline\end{array} All companies are subject to a 25% tax rate.
What is the Consolidated Net Income for the year attributable to the shareholders of A Inc.?


A) $1,510,000
B) $1,796,125
C) $1,817,500
D) $2,170,000

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