Chapter 7 - Problem 7-2 and 7-4 and 7-17 in format taught in Class.xlsx

Chapter 7 - Problem 7-2 and 7-4 and 7-17 in format taught in Class.xlsx

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Solution to Problem 7-2 Schedule of Realized / Unrealized Gain on Sale of Equipment Gain Tax Upstream Jan 1 Year 2 - Unrealized 15,000 6,000 9,000 Less Realized in Year 2 & 3 - 6,000 - 2,400 - 3,600 Dec 31 Year 3 Unrealized 9,000 3,600 5,400 Numbers in this row us Less Realized in Year 4 - 3,000 - 1,200 1,800 Numbers in this row us Dec 31, Year 4- Unrealized 6,000 2,400 3,600 Net After tax amount o Computation of Consolidated Net Income for the year ended December 31, Year 4 Peggy's Net Income 185,000 Sally's Net Income 53,000 1,800 54,800 Peggy's Share X75% 41,100 Consolidated Net Income 226,100 NCI Share of Net Income 13,700 Consolidated Income Statement for the Year Ended December 31, Year 4 Peggy Sally Adjustment Total Revenues 580,000 270,000 850,000 Miscellaneous Expenses 110,000 85,000 195,000 Depreciation Expenses 162,000 97,000 - 3,000 256,000 Income Tax Expenses 123,000 35,000 1,200 159,200 Total Expenses 395,000 217,000 610,200 Profit 185,000 53,000 239,800 Less NCI Share of Net Income 25% of 13,700 - 3,425 Consolidated Net Income 236,375 After Tax Gain Add: Realized After Tax Gain on Sale of Equipment in Year 4 Upstream
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sed for Consolidated Opening Retained Earnings Computations sed for Consolidated Net Income Computations of $1800 used in NCI Balance Sheet Computation - since transaction is UPSTREAM
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Solution to Problem 7-4 Schedule of Realized / Unrealized Gain on Sale of Equipment Gain Tax Downstream Jan 1 Year 3 - Unrealized 500,000 200,000 300,000 Less Realized in Year 3 - 100,000 - 40,000 - 60,000 Dec 31 Year 3 Unrealized 400,000 160,000 240,000 Numbers in this r Less Realized in Year 4 - 100,000 - 40,000 - 60,000 Numbers in this r Dec 31, Year 4- Unrealized 300,000 120,000 180,000 Net After tax amo Hanna Fellow Adjustment Total Equipment 7,000,000 4,000,000 - 500,000 10,500,000 Accumulated Amortization 2,700,000 1,450,000 - 200,000 3,950,000 Retained Earning , Beginning of Year 5,000,000 3,000,000 - 2,520,000 5,480,000 Net Income 1,500,000 550,000 - 160,000 100,000 - 40,000 - 110,000 1,840,000 Dividends Declared 500,000 200,000 - 200,000 500,000 Hanna's Net Income 1,500,000 Less Dividend from Fellow - 160,000 1,340,000 60,000 1,400,000 Fellow's Net Income 550,000 Hanna's Share 80% X80% 440,000 Total Net Income 1,840,000 NCI Share 20% 110,000 Schedule of Realized / Unrealized Gain on Sale of Equipment Gain Tax Upstream Jan 1 Year 3 - Unrealized 500,000 200,000 300,000 Less Realized in Year 3 - 100,000 - 40,000 - 60,000 Dec 31 Year 3 Unrealized 400,000 160,000 240,000 Numbers in this r Less Realized in Year 4 - 100,000 - 40,000 - 60,000 Numbers in this r Dec 31, Year 4- Unrealized 300,000 120,000 180,000 Net After tax amo After Tax Gain Add Realized After Tax Gain on Sales of Equipment Downstream After Tax Gain
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