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From advanced accounting, 13th edition, by Beams. Pigeon Corporation acquired a 60% interest in Home Company on January 1, 2005, for $70,000 cash when Home
From advanced accounting, 13th edition, by Beams.
Pigeon Corporation acquired a 60% interest in Home Company on January 1, 2005, for $70,000 cash when Home had Capital Stock of $60,000 and Retained Earnings of $40,000. All excess purchase cost was attributable to equipment with a 10-year (straight-line) life. Home suffered a $10,000 net loss in 2005 and paid no dividends. At year-end 2005, Home owed Pigeon $12,000 on account. Pigeon's separate income for 2005 was $150,000. Consolidated net income for 2005 a was a. $135,800 b. $136,800. c. $143,000. d. $144,000. On consolidated working papers, a subsidiary's income has a. to be reduced from beginning retained earnings b. to be completely eliminated. c. to have an allocation between the non-controlling interest share and the parent's share (which is eliminated). d. only an entry in the parent company's general ledger Step by Step Solution
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