Question

On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $310,000 in cash. The equipment had originally cost $279,000 but had a book value of only $170,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $410,000 in net income in 2018 (not including any investment income) while Brannigan reported $134,300. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $5,100 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 $430,000 (does not include investment income) and Brannigan $145,400 in income? Assume that Brannigan is a wholly owned subsidiary and the equipment transfer was downstream. Amounts a. Consolidated net income b. Consolidated net income to parent company c. Consolidated net income to parent company d. Consolidated net income

Answer 1

Solution 40000 134300 Net Income - Ackerman Net Income - Bronnigan less'. Excess amortization on uppatented technology Lesso Remove unrealised gain on equepment [ 310000 -170500] Add: Excess deprecention charged on Inflated trangleg posla ok laulmeet / 13950015) (5100) (139500) 27900 17600

Consolidated Net Income 427600 Consolidated Net Income 427600 Less: Net Income attributable to Non Controlling Interest 134300 (5100) 129200 Net Income - Branigan Less: Excess anostization Adjusted Net Income Net Income altrebutable to Non- Controlling Interest (10% of Adjusted Net Income] Consoledated Net Income to. parent company (12920) 414680 Consoledated Net Income 427600 1760 425840 134300 Less: Net Income altrebutable to Non- Controlling Interest Consoledated Net Income to parent company working Notes & Net Income - Brannigan Less: Excess amortization on inpatentend technology Less: Remove unrealized gain on equepment Add: excess depreciation charged on Inflated - transfered prece equepment Brannigan realized Income 10% of No (5100) (139500) 27400 17600 1760

Net Income - Ackerman 430000 1 Net Income - Brannigan 145400 . ( 5100) Less: Excess amortization on unpatented . technology Add: Excess depreciation changed on Inflated transfered price on 27900 168200 equipment 598200 Consoledated Net Income