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Chapter 07 - Intercompany Transfers of Noncurrent Assets and Services
P7-25 (continued)
b.
Consolidated net income for 20X4 is $304,000:
Bold Corporation’s operating income
$234,000
Toll Corporation’s net income
94,400
Amortization of differential ($44,000 / 10 years)
(4,400)
Unrealized profit on building
(20,000)
Consolidated net income
$304,000
c.
Income assigned to controlling interest is $286,500:
Consolidated net income
$304,000
Income assigned to noncontrolling interest
(17,500)
Income assigned to controlling interest
$286,500
Alternate computation:
Operating income of Bold
$234,000
Income from Toll:
Net income of Toll
$94,400
Unrealized profit on building
(20,000)
Amortization of differential
(4,400)
Realized income
$70,000
Portion of ownership held
x 0.75
52,500
Income to controlling interest
$286,500
P7-26 Transfer of Asset from One Subsidiary to Another
Bugle
Cook Products
Consolidated
Corporation
Corporation
Entity
Depreciation expense
$ ---
$ 3,000
$ 2,000
Fixed assets — Warehouse
---
45,000
40,000
Accumulated depreciation
---
3,000
12,000
Gain on sale of warehouse
15,000
---
---
