Problem

Pin, Inc., owns 80 percent of the capital stock of Son Company and 70 percent of the capit...

Pin, Inc., owns 80 percent of the capital stock of Son Company and 70 percent of the capital stock of Tin, Inc. Son owns

15 percent of the capital stock of Tin. Tin owns 25 percent of the capital stock of Pin. These ownership interrelationships

are illustrated in the following diagram:

Income before adjusting for interests in intercompany income for each corporation follows:

Pin, Inc.

$190,000

Son Company

$170,000

Tin, Inc.

$230,000

The following notations relate to the questions below:

A = Pin’s consolidated income-its separate income plus its share of the consolidated incomes of Son and Tin

B = Son’s consolidated income-its separate income plus its share of the consolidated income of Tin

C = Tin’s consolidated income-its separate income plus its share of the consolidated income of Pin

1. The equation, in a set of simultaneous equations, that computes A is:

a A= 0.75(190,000+ 0.8B+ 0.7C)

b A= 190,000+ 0.8B+ 0.7C

c A= 0.75(190,000)+ 0.8(170,000)+ 0.7(230,000)

d A= 0.75(190,000)+ 0.8B+ 0.7C


2. The equation, in a set of simultaneous equations, that computes B is:

a B= 170,000+ 0.15C+ 0.75A

b B= 170,000+ 0.15C

c B= 0.2(170,000)+ 0.15(230,000)

d B= 0.2(170,000)+ 0.15C


3. Tin’s noncontrolling interest share of consolidated income is:

a 0.15(230,000)

b 230,000+ 0.25A

c 0.15(230,000)+ 0.25A

d 0.15C


4. Son’s noncontrolling interest share of consolidated income is:

a $34,316

b $25,500

c $45,755

d $30,675

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Solutions For Problems in Chapter 9