Effect on consolidated net income of acquisition of affiliate's debt from non-affiliate A Parent Company owns 100 percent of its Subsidiary. During 2018, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $1,050,000 and the subsidiary reports net income of $420,000. The parent had a bond payable outstanding on December 31, 2018, with a carrying value equal to $882,000. The Subsidiary acquired the bond on December 31, 2018 for $829,500. During 2018, the Parent reported interest expense (related to the bond) of $73,500 while the Subsidiary reported no interest income (related to the bond). What is consolidated net income for the year ended December 31, 2018? $1,543,500 $1,470,000 $1,596,000 $1,522,500

Effect on consolidated net income of acquisition of affiliate's debt from non-affiliate A Parent Company owns 100 percent of its Subsidiary. During 2018, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $1,050,000 and the subsidiary reports net income of $420,000. The parent had a bond payable outstanding on December 31, 2018, with a carrying value equal to $882,000. The Subsidiary acquired the bond on December 31, 2018 for $829,500. During 2018, the Parent reported interest expense (related to the bond) of $73,500 while the Subsidiary reported no interest income (related to the bond). What is consolidated net income for the year ended December 31, 2018? $1,543,500 $1,470,000 $1,596,000 $1,522,500

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 29E

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Effect on consolidated net income of acquisition of affiliate's debt from non-affiliate

A Parent Company owns 100 percent of its Subsidiary. During 2018, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $1,050,000 and the subsidiary reports net income of $420,000. The parent had a bond payable outstanding on December 31, 2018, with a carrying value equal to $882,000.

The Subsidiary acquired the bond on December 31, 2018 for $829,500. During 2018, the Parent reported interest expense (related to the bond) of $73,500 while the Subsidiary reported no interest income (related to the bond). What is consolidated net income for the year ended December 31, 2018?

$1,543,500

$1,470,000

$1,596,000

$1,522,500

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