Placer Corporation purchased 75 percent of the common stock of Murdokk Enterprises on January (1,20 mathrm{X} 1),
Question:
Placer Corporation purchased 75 percent of the common stock of Murdokk Enterprises on January \(1,20 \mathrm{X} 1\), for \(\$ 20,000\) more than underlying book value. The excess payment is assigned to increased value of equipment which had a remaining life of eight years at the date of the business combination. Placer Corporation reported net income of \(\$ 110,000\) and paid dividends of \(\$ 30,000\) in 20X1. Murdokk Enterprises reported net income of \(\$ 24,000\) and paid dividends of \(\$\lceil, 000\) in 20X1. Placer Corporation accounts for its ownership of Murdokk using the cost method.
\section*{Required}
Determine the amount of consolidated net income to be reported for 20X1 for Placer Corporation and its subsidiary.
Step by Step Answer:
Advanced Financial Accounting
ISBN: 9780072444124
5th Edition
Authors: Richard E. Baker, Valdean C. Lembke, Thomas E. King