ardner Corp. owns 80% of the voting common stock of Lockhart Co. Lockhart owns 70% of Canning Co. Gardner and Lockhart both use the initial value method to account for their investments. The following information is available from the financial statements and records of the three companies: Gardner Corp. Lockhart Co. Canning Co. Separate company net income before investment income $900,000 $650,000 $150,000 Dividend income from investment in subsidiary 250,000 120,000 Deferral of intra-entity gains 110,000 80,000 20,000 Amortization expense related to excess fair value over book value of investment 40,000 25,000 Separate company net income includes intra-entity gains before the consolidating deferral but does not include dividend income from investment in subsidiary. The accrual-based net income of Gardner Corp. is calculated to be
ardner Corp. owns 80% of the voting common stock of Lockhart Co. Lockhart owns 70% of Canning Co. Gardner and Lockhart both use the initial value method to account for their investments. The following information is available from the financial statements and records of the three companies: Gardner Corp. Lockhart Co. Canning Co. Separate company net income before investment income $900,000 $650,000 $150,000 Dividend income from investment in subsidiary 250,000 120,000 Deferral of intra-entity gains 110,000 80,000 20,000 Amortization expense related to excess fair value over book value of investment 40,000 25,000 Separate company net income includes intra-entity gains before the consolidating deferral but does not include dividend income from investment in subsidiary. The accrual-based net income of Gardner Corp. is calculated to be
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ardner Corp. owns 80% of the voting common stock of Lockhart Co. Lockhart owns 70% of Canning Co. Gardner and Lockhart both use the initial value method to account for their investments. The following information is available from the financial statements and records of the three companies:
| Gardner Corp. |
Lockhart Co. |
Canning Co. |
|
| Separate company net income before investment income | $900,000 | $650,000 | $150,000 |
| Dividend income from investment in subsidiary | 250,000 | 120,000 | |
| Deferral of intra-entity gains | 110,000 | 80,000 | 20,000 |
| Amortization expense related to excess fair value | |||
| over book value of investment | 40,000 | 25,000 | |
Separate company net income includes intra-entity gains before the consolidating deferral but does not include dividend income from investment in subsidiary.
The accrual-based net income of Gardner Corp. is calculated to be
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