Up and its 80 percent owned subsidiary (Down) reported the following figures for the year ending December
Question:
Up and its 80 percent owned subsidiary (Down) reported the following figures for the year ending December 31, 2010. Down paid dividends of $30,000 during this period.
Sales. LO9 Cost of goods sold Operating expenses Dividend income . .
Up
$(600,000)
300,000 174,000
(24,000)
Down
$(300,000)
140,000 60,000
-0-
Net income
$(150,000) $(100,000)
In 2009, unrealized gains of $30,000 on upstream transfers of $90,000 were deferred into 2010. In 2010, unrealized gains of $40,000 on upstream transfers of $110,000 were deferred into 2011.
a. What figures appear in a consolidated income statement?
b. What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 30 percent.
Step by Step Answer:
Advanced Accounting
ISBN: 9780073379456
9th Edition
Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle