A few years ago, Posey Ltd. acquired 90 percent of the common shares of Suba Co. In February 2000, Suba purchased goods for$12,000 and in April 20X0, sold them to Posey for $15,000. Suba's usual gross margin is 25 percent, but it gave Posey a discount, In July20X0, Posey sold 60 percent of those goods to one of its customers for $12,000. The rest of the goods remain unsold at the end of theyear. Both Posey and Suba have income tax rates of 40 percent.To calculate the income tax expense for the consolidated income statement, add together the income tax expense from Posey andSuba's separate-entity income statements and reduce by a net adjustment ofa. $0.Ob. $384.Oc. $480.d. $600.

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Description: A few years ago, Posey Ltd. acquired 90 percent of the common shares of Suba Co. In February 2000, Suba purchased goods for$12,000 and in April 20X0, sold them to Posey for $15,000. Suba's usual gross margin is 25 percent, but it gave Posey a discou

Posey Co. acequired 90% shares of Suba Co in 20X0 . So Suba became…

Answered: years ago, Posey Ltd. acc $12.000 and

Business

Accounting

years ago, Posey Ltd. acc $12.000 and

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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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

A few years ago, Posey Ltd. acquired 90 percent of the common shares of Suba Co. In February 2000, Suba purchased goods for
$12,000 and in April 20X0, sold them to Posey for $15,000. Suba's usual gross margin is 25 percent, but it gave Posey a discount, In July
20X0, Posey sold 60 percent of those goods to one of its customers for $12,000. The rest of the goods remain unsold at the end of the
year. Both Posey and Suba have income tax rates of 40 percent.
To calculate the income tax expense for the consolidated income statement, add together the income tax expense from Posey and
Suba's separate-entity income statements and reduce by a net adjustment of
a. $0.
Ob. $384.
Oc. $480.
d. $600.

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