Use the following to answer questions 1-7: Lincoln Corporation owns 80 percent of the common stock of Amston Company, purchased at book value, and accounts for its investment using the basic equity method. On January 1, 2000, Amston sold a modular building, which it had purchased 3 years before for $2,400,000, to Lincoln for $1,820,000. Amston was depreciating the building on a straight-line basis over 10 years. Lincoln continued to depreciate the building using straight-line depreciation over the 7 years remaining in the building's original life. Lincoln reported separate operating income of $180,000 in 2000 and $280,000 in 2001. Amston reported net income of $300,000 in 2000 and $80,000 in 2001. Neither company declared any dividends. Consolidated depreciation in 2001: realize that P is taking too much depreciation, because Ps depreciation includes the expense from the asset P purchased: 1820k/7. This asset was being depreciated by Sat 2400k/10. Realize we are trying to make consolidated depreciation look as if the upstream sale never occurred; thus consolidated depreciation should be P's reported 600k 1820/7 + S's reported 380k + 2400/10 = 960k. 4. Based on the information given above, what is P's share of consolidated net income for 2000? A) $292,000 B) $308,000 C) $324,000 D) $420,000 Using the above, Consol Income in 2000 is P's separate income :180k + [(S income: 300k, - gain (140), + confirmed gain 20) = 180, - MI (180k*.2 = 36k) = 324k. 5. Based on the information given above, what amount of income is assigned to the noncontrolling interest in the 2001 consolidated income statement? A) $8,000 B) $12,000 $16,000 D) $20,000 d Minority Interest in S Income is just going to be Ss confirmed Net Income * the MI%, or [ 80k + 20k (confirmed gain) ] *.2 = 20k. $0. 6. Based on the information given above, what amount of gain on the intercompany sale of the building is reported as gain in the 2000 consolidated income statement? A) B) $112,000 $128,000 D) $140,000 7. Consider the information given above. Assume that Lincoln continues to use the building for 8 years from the time of the purchase from Amston and then sells the building to an unrelated party. When is the gain on the intercompany transfer considered to be realized from a consolidated perspective? A) Never. B) At the time the building is transferred from Amston to Lincoln. As the building is used by Lincoln. When the building is sold to the unrelated party