Slaughter earned 220000 in net income in 2013 not including, Ask an Expert

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On January 1, 2013, Slaughter sold equipment to Bennett (a wholly owned subsidiary) for $120,000 in cash. The equipment had originally cost $100,000 but had a book value of only $70,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method.

Slaughter earned $220,000 in net income in 2013 (not including any investment income) while Bennett reported $90,000. Slaughter attributed any excess acquisition-date fair value to Bennett's unpatented technology, which was amortized at a rate of $8,000 per year.

a. What is the consolidated net income for 2013?

b. What is the parent's share of consolidated net income for 2013 if Slaughter owns only 90 percent of Bennett?

c. What is the parent's share of consolidated net income for 2013 if Slaughter owns only 90 percent of Bennett and the equipment transfer was upstream?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9407392

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