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A wholly-owned subsidiary reports income of $2 million and an other comprehensive loss of $100,000. The...

  1. A wholly-owned subsidiary reports income of $2 million and an other comprehensive loss of $100,000. The subsidiary's revalued net assets consist of indefinite life identifiable intangible assets. Impairment testing for the year reveals $250,000 in impairment on these intangibles. The subsidiary did not declare any dividends.

    Eliminating entry (C) reduces Investment in Subsidiary by:

A.

 $1,950,000.

B.

$2,000,000.

C.

$1,650,000

D.

$1,750,000.
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Answer #1

Answer: C. $1,650,000

Computation:-

Net Income $2,000,000

Less: loss on Other Comprehensive Income ($100,000)

Less: Impairment of Intangibles ($250,000)

reduces Investment in Subsidiary   $1,650,000

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