On January 2,2014,Pal Corporation sold warehouse equipment to SimCo,a wholly-owned subsidiary.The equipment had an original cost of $130,000 and a net book value of $100,000 when it was sold to SimCo for $150,000.Both companies agreed that the equipment had a five-year remaining life and compute depreciation on the straight-line method.The equipment has no salvage value.
Pal reported $470,000 in net income in 2014 (prior to reporting any income from SimCo),and SimCo reported $160,000 in net income.
Required:
1.Calculate consolidated net income for 2014.
2.Determine the controlling share of net income for the year if Pal only owned 75% of SimCo.
3.Determine the controlling share of net income for the year if Pal only owned 75% of SimCo AND the equipment transfer was upstream.

Question

Quizplus · Accepted Answer

The Answer of On January 2,2014,Pal Corporation sold warehouse equipment to SimCo,a wholly-owned subsidiary.The equipment had an original cost of $130,000 and a net book value of $100,000 when it was sold to SimCo for $150,000.Both companies agreed that the equipment had a five-year remaining life and compute depreciation on the straight-line method.The equipment has no salvage value.
Pal reported $470,000 in net income in 2014 (prior to reporting any income from SimCo),and SimCo reported $160,000 in net income.
Required:
1.Calculate consolidated net income for 2014.
2.Determine the controlling share of net income for the year if Pal only owned 75% of SimCo.
3.Determine the controlling share of net income for the year if Pal only owned 75% of SimCo AND the equipment transfer was upstream.

On January 2,2014,Pal Corporation Sold Warehouse Equipment to SimCo,a Wholly-Owned