On January 1, 2012, Jones Company bought 15% of Whitton Company. Jones paid $150,000 for these shares, an amount that exactly equaled the proportionate book value of Whitton. On January 1, 2013, Whitton acquired 80% ownership of Jones. The following data are available concerning Whitton's acquisition of Jones: Excess fair value over book value (assigned to trademarks) is amortized over 20 years.
The initial value method is used by both companies.
The following information is available regarding Jones and Whitton:
Compute Whitton's accrual-based consolidated net income for 2013.

Question

On January 1, 2012, Jones Company bought 15% of Whitton Company. Jones paid $150,000 for these shares, an amount that exactly equaled the proportionate book value of Whitton. On January 1, 2013, Whitton acquired 80% ownership of Jones. The following data are available concerning Whitton's acquisition of Jones:  Excess fair value over book value (assigned to trademarks) is amortized over 20 years.
The initial value method is used by both companies.
The following information is available regarding Jones and Whitton: 
Compute Whitton's accrual-based consolidated net income for 2013.

Quizplus · Accepted Answer

Parent's Accrual Income ($140,000 + $14,000 - $9,000) = $145,000 + Parent's Portion of Sub's Accrual Income ($50,000 × .80) $40,000 = $185,000

On January 1, 2012, Jones Company Bought 15% of Whitton