acct 3 - Ans Sales $(900,000 COGS 440,000 Operating...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Up and its 80% owned subsidiary (down) reported the following figures for the year ending Dec. 31, 2011. Down paid dividends of $30,000 during this period. UP Down Sales $(600,000) $(300,000) COGs 300,000 140,000 Operating expenses 174,000 60,000 Dividen Income (24,000) 0 Net Income $(150,000) $(100,000) In 2010, unrealized gains of $30,000 on upstream transfers of $90,000 were deferred into 2011. In 2011, unrealized gains of $40,000 on upstream transfers of $110,000 were deferred into 2012. Question: a. What figures appear in a consolidated income statement?
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Ans. Sales $ (900,000) COGS 440,000 Operating expenses 234,000 Dividend income (24,000) Net income $(250,000) b. What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 30 percent. Ans. Income tax expense = 82200 UP Tax expense = 150000 x 30%= 45000 Dividend tax= 24000 x 30%= 7200 DOWN Tax expense = 100000 x 30%= 30000 Amount for Consolidation 82200...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern