On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $150,000 in cash. The equipment had originally cost $135,000 but had a book value of only $82,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $510,000 in net income in 2018 (not including any investment income) while Brannigan reported $167,300. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $6,100 per year. a. What is consolidated net income for 2018? b. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan? c. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was unstream?

On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $150,000 in cash. The equipment had originally cost $135,000 but had a book value of only $82,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $510,000 in net income in 2018 (not including any investment income) while Brannigan reported $167,300. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $6,100 per year. a. What is consolidated net income for 2018? b. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan? c. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was unstream?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Waterway Ltd. acquired an excavator on January 1, 2020, for ¥11,600 (all amounts in thousands). This…

A: The Revaluation is the process of assessing the fair market value of an asset. In the context of the…

Q: OVE INC. has a policy of using non-current assets until they can no longer operate and are…

A: Explanation of Concept Deferred Tax Assets / Deferred tax Liability : are to be calculated when…

Q: HH Co. purchased equipment at the beginning of 2020 for $53,000 with an estimated residual value of…

A: Answer) Calculation of gain or loss on disposal of Equipment Gain or loss on disposal of Equipment =…

Q: Jung Inc. owns a patent for

A: Under US GAAP, if the carrying value (book value) is greater than undiscounted expected future cash…

Q: On January 1, 2021, Tunes Corp. sold equipment to Kim Inc. (a wholly-owned subsidiary) for $192,000…

A: Given: Tune owned only 85% of Kim Tunes Corp. sold equipment to Kim Inc. (a wholly-owned…

Q: On January 1, 2019, Ferrothorn Co. sold equipment, to its subsidiary, Klang Corp., for P115,000. The…

A: Actual cost of asset=125000 less Accumulated depreciation =45000 Value of asset as on 1.1.19= 80000…

Q: On January 1, 2019 Pink Corp. sold a machine for $7,400 to slink Corp., its wholly-owned subsidiary.…

A: Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets…

Q: On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $310,000 in…

A: "Since you have asked a question with sub-parts more than three, as per guidelines, the first three…

Q: On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $200,000 in…

A: a.Calculate gain on sale of equipment:Gain on sale of equipment = $200,000 - $110,000Gain on sale of…

Q: Burrell Company purchased a machine for $10,000 on January 2, 2019. The machine has an estimated…

A: DEPRECIATION UNDER DOUBLE DECLINING METHOD Rate =100%5 =20% Double declining rate = 20×2=40%

Q: The Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost…

A: Journal Entry WorksheetInitial Equipment Cost CorrectionRemove the incorrect capitalization:Debit…

Q: Brunswick Manufacturing owns one piece of equipment. The equipment was purchased on January 1, 2019…

A: The question is based on the concept of Depreciation Accounting. Depreciation is the decrease in the…

Q: Ackerman reported $540,000 in net income in 2018 (not including any investment income) while…

A: As Per above information we only assist 4 answer :

Q: On January 1, 2021, Roberts Company purchased major pieces of manufacturing equipment for a total of…

A: Taxable income is the income on which the tax rate is imposed. It is the income net of the…

Q: On January 1, 2025, Jill Inc. sold equipment to its subsidiary, Tim Co., for $125,000. The equipment…

A: Consolidation arises when two or more companies combine to create a new single company. For example,…

Q: Tiger Ltd purchased a machine on 1 July 2017 at the cost of $640,000. The machine is expected to…

A: Depreciation is the reduction in the value of asset due to obsolesce, wear and tear or usage.…

Q: On January 1, 2020, Pink Corp. 'sold' a machine for $6000 to Slink Corp., its wholly-owned…

A: Depreciation expense: Depreciation expense refers to the reduction in the total value of the asset…

Q: On January 1, 2022, Kenya Company, an 80% owned subsidiary of Oliver, Inc., transferred equipment…

A: The objective of this question is to determine how the transfer of equipment from Kenya Company to…

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

On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $150,000 in cash. The equipment had
originally cost $135,000 but had a book value of only $82,500 when transferred. On that date, the equipment had a five-year
remaining life. Depreciation expense is computed using the straight-line method.
Ackerman reported $510,000 in net income in 2018 (not including any investment income) while Brannigan reported $167,300.
Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of
$6,100 per year.
a. What is consolidated net income for 2018?
b. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan?
c. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan and the equipment
transfer was upstream?
d. What is the consolidated net income for 2019 if Ackerman reports $530,000 (does not include investment income) and Brannigan
$179,400 in income? Assume that Brannigan is a wholly owned subsidiary and the equipment transfer was downstream.
Amounts
a. Consolidated net income
b. Consolidated net income to parent company
c. Consolidated net income to parent company
d. Consolidated net income

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On January 1, 2017, Jace and Naya Corporation acquired equipment at a cost of ₱1,800,000. Jace and Naya adopted the sum-of- the-years’-digits method of depreciation for this equipment and had been recording depreciation over an estimated life of eight years, with no residual value. At the beginning of 2020, a decision was made to change to the straight-line method of depreciationfor this equipment. The depreciation expense for 2020 would bea. ₱150,000 c. ₱360,000b. ₱93,750 d. ₱225,000
Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?
Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is expected to have a useful life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years.The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit the company has deducted $60,000 entertainment expense, and $80,000 salary expense that has not yet been paid. Also the company has included $70,000 interest as income that the company has not yet received. The tax rate is 30%.Required: (c) Prepare the necessary journal entries on 30 June 2017. (3 marks)
Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $1,938,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $ 1,790,000 24,000 14,000 110,000 $ 1,938,000 The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2022 and 2023. In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment. Required: 1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024. 2. Ignoring income taxes, prepare any 2024 journal…