In order to calculate the consolidated net income, shouldn't it be: (operating income of purple + net income of green)?With Green being calculated as:Dividend Income for orange (28000*.1), and equity method income for yellow (58750*.4)Total=89,600 + 2,800 + 23,500 = 115,900? Purple Corporation recently attempted to expand by acquiring ownership in Green Company. The following ownership structure wasreported on December 31, 20X9:Percentage ofOwnership HeldInvestorInvesteePurple CorporationGreen CompanyOrange CorporationGreen CompanyGreen CompanyOrange CorporationBlue CompanyYellow Company70%106040The following income from operations (excluding investment income) and dividend payments were reported by the companies during20X9:DividendsPaidOperatingCompanyPurple CorporationGreen CompanyIncome$89,600$61,000Orange CorporationBlue CompanyYellow Company20,80040, 25098,50058,75010,90028,00082,80039,900Required:Compute the amount reported as consolidated net income for 20X9.

Consolidated net income- The consolidated net income is the bottom amount of all these companies…

In order to calculate the consolidated net income, shouldn't it be: (operating income of purple + net income of green)? With Green being calculated as: Dividend Income for orange (28000*.1), and equity method income for yellow (58750*.4) Total=89,600 + 2,800 + 23,500 = 115,900?

In order to calculate the consolidated net income, shouldn't it be: (operating income of purple + net income of green)? With Green being calculated as: Dividend Income for orange (28000.1), and equity method income for yellow (58750.4) Total=89,600 + 2,800 + 23,500 = 115,900?

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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Question

In order to calculate the consolidated net income, shouldn't it be: (operating income of purple + net income of green)?

With Green being calculated as:

Dividend Income for orange (28000*.1), and equity method income for yellow (58750*.4)

Total=89,600 + 2,800 + 23,500 = 115,900?

Purple Corporation recently attempted to expand by acquiring ownership in Green Company. The following ownership structure was
reported on December 31, 20X9:
Percentage of
Ownership Held
Investor
Investee
Purple Corporation
Green Company
Orange Corporation
Green Company
Green Company
Orange Corporation
Blue Company
Yellow Company
70%
10
60
40
The following income from operations (excluding investment income) and dividend payments were reported by the companies during
20X9:
Dividends
Paid
Operating
Company
Purple Corporation
Green Company
Income
$89,600
$61,000
Orange Corporation
Blue Company
Yellow Company
20,800
40, 250
98,500
58,750
10,900
28,000
82,800
39,900
Required:
Compute the amount reported as consolidated net income for 20X9.

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