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Connector Corporation invested in an unincorporated joint venture and elected to use pro rata consolidation in...

Connector Corporation invested in an unincorporated joint venture and elected to use pro rata consolidation in preparing its financial statements. Connector reported income of $120,000 from its separate operations and net income of $150,000 for the year ended December 31, 2008. The joint venture reported assets of $150,000 and liabilities of $60,000 on January 1, 2008, and assets of $240,000 and liabilities of $75,000 on December 31, 2008. It made no distributions to owners during the year. Connector reports total assets (excluding its investment in the unincorporated joint venture) of $550,000 at December 31, 2008.

17. Based on the preceding information, what is Connector's percentage ownership in the joint venture?
A. 20 percent
B. 50 percent
C. 40 percent
D. 25 percent

*I know the answer is 40 oercent but if you can please show computations for that answer.

18. Based on the preceding information, what amount of total assets will Connector report in its balance sheet on December 31, 2008?
A. $646,000
B. $625,000
C. $610,000
D. $628,000

*I know the answer is $646,000 but if you can please show computations for that answer.

19. Based on the preceding information, Connector's total assets at the end of the year will be highest if it were able to use:
A. pro rata consolidation.
B. equity-method reporting.
C. cost-method reporting.
D. full consolidation.

*I know the answer is D but if you can please show computations for that answer.

On January 1, 2008, Gulfstream Corporation acquired 40 percent of the voting shares of Hunter Company for $65,000. Hunter reported net income of $45,000 and paid dividends of $10,000 in 2008. Gulfstream reported operating income of $50,000 for the year. There is 80 percent exemption of intercompany dividends and the effective tax rate is 35 percent. Assume that the equity method is being used.

20. Based on the preceding information, what would Gulfstream report as income tax expense for the year?
A. $17,500
B. $18,760
C. $23,800
D. $22,540

*I know the answer is $18760 but if you can please show computations for that answer.

21. Based on the preceding information, what amount would Gulfstream report as net income (after taxes) for the year?
A. $49,240
B. $68,000
C. $64,000
D. $67,500

*I know the answer is $49,240 but if you can please show computations for that answer.

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Answer #1

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