E3-4 Correction of consolidated net income Liong Corporation paid $2,500,000 in cash for an 80 percent interest in Taro Corporation on January 1, 2016, when the book value of Taro's net assets was $2,250,000. Some additional information is given below: a Land was overvalued by $100,000. b Equipment with a five-year remaining useful life was undervalued by $150,000. c Taro's net income was $300,000. d Liong's net income was $1,440,000, including an income of $240,000 from Taro. REQUIRED 1. Calculate the goodwill that should appear in the consolidated balance sheet of Liong and Subsidiary at December 31, 2016. 2. Calculate consolidated net income for 2016.

E3-4 Correction of consolidated net income Liong Corporation paid $2,500,000 in cash for an 80 percent interest in Taro Corporation on January 1, 2016, when the book value of Taro's net assets was $2,250,000. Some additional information is given below: a Land was overvalued by $100,000. b Equipment with a five-year remaining useful life was undervalued by $150,000. c Taro's net income was $300,000. d Liong's net income was $1,440,000, including an income of $240,000 from Taro. REQUIRED 1. Calculate the goodwill that should appear in the consolidated balance sheet of Liong and Subsidiary at December 31, 2016. 2. Calculate consolidated net income for 2016.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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