Question

Problem 5-24 (LO 5-7) On January 1, 2018, 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 2018 (not including any Investment Income) while Brannlgan reported $101,300. Ackerman attributed any excess acquisition date fair value to Brannlgan's unpatented technology, which was amortized at a rate of $4,100 per year. a. What is consolidated net Income for 2018? b. What is the parent's share of consolidated net Income for 2018 If Ackerman owns only 90 percent of Brannigan? c. What is the parent's share of consolidated net Income for 2018 If Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? d. What is the consolidated net Income for 2019 If Ackerman reports $330,000 (does not include Investment Income) and Brannigan $111,400 In Income? Assume that Brannlgan is a wholly owned subsidiary and the equipment transfer was downstream. % Answer is complete but not entirely correct. Consolidated net income Consolidated net income to parent company Consolidated net income to parent company Consolidated net income Amounts s 331.800 $ 321,880 $ 329,440 $ 451,900

Answer 1

1	Consolidated net income for 2018
		Amount (in $)
	Ackerman reported income	310000
	Brannigan reported income	101300
	Total	411300
Less:	Amortization of unpatented technology	-4100
Less:	Excess depreciation charged on account
	of transfer of asset at higher price over
	and above the book value
	Excess amount = 210000-115500 = 94500	-94500
Add:	Excess amount per year of remaining life	18900
	(94500 / 5)
	Consolidated income =	331600
2	Consolidated net income for 2018 if Ackerman owns only 90% of Brannigan
		Amount (in $)
	Ackerman reported income	310000
	Brannigan reported income (101300 * 90%)	91170
	Total	401170
Less:	Amortization of unpatented technology (4100 * 90%)	-3690
Less:	Excess depreciation charged on account
	of transfer of asset at higher price over
	and above the book value
	Excess amount = 210000-115500 = 94500	-94500
Add:	Excess amount per year of remaining life	18900
	(94500 / 5)
	Consolidated income =	321880
3	Consolidated net income for 2018 if Ackerman owns only 90% of Brannigan
	and the equipment transfer was upstream
	Consolidated income	331600
Less:	Net Income attributable to Non controlling interest	-2160
	10% * (101300-4100-94500-18900)
		329440
4	Consolidated net income for 2019
		Amount (in $)
	Ackerman reported income	330000
	Brannigan reported income	111400
	Total	441400
Less:	Amortization of unpatented technology	-4100
Add:	Excess amount per year of remaining life	18900
	(94500 / 5)
	Consolidated income =	456200