Question

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On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $190,000 in cash. The equipment had originally cost $171,000 but had a book value of only $104,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $470,000 in net income in 2018 (not including any investment income) while Brannigan reported $154,100. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $5,700 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 $490,000 (does not include investment income) and Brannigan $165,800 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

в Amount 470000 154100 -5700 -85500 17100 550000 Amount 550000 1 Consoldiate net income 2018 2 Particulars 3 Ackerman Net income 4 Brannigan Net income 5 Excess Amortization 6 Unrealiosed gain on equipment 7 Excess depreciation by inflation 8 Consolidated Income 9 10 Particulars 11 Net Income 12 Income Attributable to Non Controlling interest(10%) 13 Brannigan Net income 14 Excess Amortization 15 Adjusted Net Income 16 Non Controlling interest(10%) 17 18 Consolidated Net Income to Parent Company 19 20 Particulars 21 Net Income 22 Net income to Non Controlling Interest 23 Net Income to Parent Company 154100 -57001 148400 148401 535160 Amount 550000 -8000 5420001 25 Net income to Non Controlling Interest Brannigan Net income Excess Amortization Unrealiosed gain on equipment Excess depreciation by inflation Total Non controlling Interest 154100 -5700 -85500 17100 800001 10% 80001

33 34 Particulars 35 Ackerman Net income 36 Brannigan Net income 37 Excess Amortization 38 Excess depreciation by inflation 39 Consolidated Net Income Amount 490000 165800 -5700 17100 667200 40

1 Consoldiate net income 2018 2 Particulars 3 Ackerman Net income 4. Brannigan Net income 5 Excess Amortization 6 Unrealiosed gain on equipment 7 Excess depreciation by inflation 8 Consolidated Income Amount 470000 154100 -5700 =19000-104500 =38000-20900 =SUM(B3:37) 9 Amount =+B8 10 Particulars 11 Net Income 12 Income Attributable to Non Controlling interest(10%) 13 Brannigan Net income Excess Amortization 15 Adjusted Net Income 16 Non Controlling interest(10%) 14 =B4 =+B5 =SUM(B13:B14) =+B15*10% 17 (=+B11-B16 Amount =+B8 =-B32 =SUM(B21:B22) 18 Consolidated Net Income to Parent Company 19 20 Particulars 21 Net Income 22 Net income to Non Controlling Interest 23 Net Income to Parent Company 24 25 Net income to Non Controlling Interest Brannigan Net income Excess Amortization Unrealiosed gain on equipment Excess depreciation by inflation Total 31 Non controlling Interest 32 33 =+B13 =+B5 =+B6 =+B7 =SUM(B26:B29) 0.1 =+B30%B31

33 34 Particulars 35 Ackerman Net income 36 Brannigan Net income 37 Excess Amortization 38 Excess depreciation by inflation 39 Consolidated Net Income 40 Amount 490000 165800 =+B5 =+B7 =SUM(B35:B38)