Chase Company owns 80% of Lawrence Company and 40% of Ross Company. Lawrence Company also owns 30% of Ross Company. Separate operating incomes for 2013 of Chase, Lawrence, and Ross are $450,000, $300,000, and $250,000, respectively. Each company also retains a $20,000 unrealized gain in their current income figures. Annual amortization expense of $15,000 is assigned to Chase's investment in Lawrence and another $15,000 is assigned to Lawrence's investment in Ross.
Compute Chase's accrual-based income for 2013.

Question

Quizplus · Accepted Answer

Parent's Accrual Income ($450,000 - $20,000) = $430,000 + First Sub's Accrual Income ($329,500 × .80) $263,600 + Second Sub's Accrual Income ($215,000 × .40) $86,000 = $779,600

Chase Company Owns 80% of Lawrence Company and 40% of Ross