acct 3

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

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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?
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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...
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