Company A owns 85 percent of Company B's stock and 80 percent of Company C's stock.All acquisitions were made at book value.The fair values of noncontrolling interests at the time of acquisition were equal to the proportionate share of the book values of the companies.The companies file a consolidated tax return each year and in 2009 paid a total tax of $112,000.Each company is involved in a number of intercompany inventory transfers each period.Information on the companies' activities for 2009 is as follows:
Company A does not record income tax expense on income from subsidiaries because a consolidated tax return is filed.

-Based on the information provided,what amount of consolidated net income will be reported for the year 2009?
A)$168,000
B)$280,000
C)$165,000
D)$250,000

Question

Company A owns 85 percent of Company B's stock and 80 percent of Company C's stock.All acquisitions were made at book value.The fair values of noncontrolling interests at the time of acquisition were equal to the proportionate share of the book values of the companies.The companies file a consolidated tax return each year and in 2009 paid a total tax of $112,000.Each company is involved in a number of intercompany inventory transfers each period.Information on the companies' activities for 2009 is as follows:
Company A does not record income tax expense on income from subsidiaries because a consolidated tax return is filed.
 
-Based on the information provided,what amount of consolidated net income will be reported for the year 2009?
A)$168,000 
B)$280,000 
C)$165,000 
D)$250,000

Quizplus · Accepted Answer

Consolidated net income is the sum of the net incomes of the parent company and its subsidiaries, minus any minority interest. In this case, the parent company's net income is $100,000, and the subsidiary's net income is $68,000. There is no minority interest, so the consolidated net income is $100,000 + $68,000 = $168,000.

Company a Owns 85 Percent of Company B's Stock and 80