Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $210,000 in cash. The equipment had originally cost $189,000 but had

On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $210,000 in cash. The equipment had originally cost $189,000 but had a book value of only $115,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method.

Ackerman reported $310,000 in net income in 2021 (not including any investment income) while Brannigan reported $101,300. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $4,100 per year.

  1. What is consolidated net income for 2021?
  2. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan?
  3. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream?
  4. What is the consolidated net income for 2022 if Ackerman reports $330,000 (does not include investment income) and Brannigan $111,400 in income? Assume that Brannigan is a wholly owned subsidiary and the equipment transfer was downstream.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting For Managerial Planning Decision Making And Control

Authors: Woody Liao, Andrew Schiff, Stacy Kline

6th Edition

1516551702, 9781516551705

More Books

Students also viewed these Accounting questions