Use the following information to answer the question(s) below.

Paint Corporation owns 82% of Achille Corporation and Achille Corporation owns 80% of Badrack Corporation. For the current year, the separate net incomes (excluding investment income) of Paint, Achille, and Badrack are $120,000, $100,000, and $50,000, respectively. The cost of each investment was equal to the book value of the investment, which was also equal to the fair value.

-Controlling interest share of consolidated net income for Paint Corporation and Subsidiaries is:
A)$234,800.
B)$244,800.
C)$260,000.
D)$270,000.

Question

Use the following information to answer the question(s) below.

Paint Corporation owns 82% of Achille Corporation and Achille Corporation owns 80% of Badrack Corporation. For the current year, the separate net incomes (excluding investment income) of Paint, Achille, and Badrack are $120,000, $100,000, and $50,000, respectively. The cost of each investment was equal to the book value of the investment, which was also equal to the fair value.

-Controlling interest share of consolidated net income for Paint Corporation and Subsidiaries is:
A)$234,800.
B)$244,800.
C)$260,000.
D)$270,000.

Quizplus · Accepted Answer

Paint Corporation's controlling interest share of consolidated net income is $234,800, which is calculated as follows:Paint Corporation's share of Achille Corporation's net income: 82% x $100,000 = $82,000Achille Corporation's share of Badrack Corporation's net income: 80% x $50,000 = $40,000Paint Corporation's share of Badrack Corporation's net income: 82% x $40,000 = $32,800Paint Corporation's controlling interest share of consolidated net income: $82,000 + $32,800 = $234,800

Use the Following Information to Answer the Question(s) Below