Question
In: Accounting
Jazz Corporation receives management consulting services from its 90 percent owned subsidiary, Laker Inc.
Jazz Corporation receives management consulting services from its 90 percent owned subsidiary, Laker Inc. During 20X7, Jazz paid Laker $70,000 for its services. Laker's labor cost and other associated costs for the employees providing services to Jazz totaled $10,000 in 20X7. Jazz reported $450,000 of income from its own separate operations for 20X7, and Laker reported net income of $50,000.
Based on the preceding information, what amount of income should be
reported as consolidated income on the 20X7 Consolidated Financial
Statements?
Solutions
Expert Solution
Consolidated net income that should reported in 20X7 = $500,000
Explanation:
Net income of Jazz reported= $450,000
Net income of Laker Inc. reported= $50,000
Consolidated net income that should reported in 20X7:
= $450,000+50,000
= $ 500,000
ekkarill92 answered 2 years agoRelated Solutions
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Revenues
$
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$
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$
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Cost of goods sold
415,000
315,000
730,000
Operating expenses
116,000
76,000
232,000
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$
(139,000
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Following are separate income statements for Austin, Inc., and its 90 percent owned subsidiary, Rio Grande...
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Austin
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Consolidated
Revenues
$
(763,000
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$
(542,000
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$
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Cost of goods
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421,000
321,000
742,000
Operating
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67,000
216,000
Equity in
earnings of Rio Grande
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Individual
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$
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$
(154,000
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Consolidated net
income
$
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Corporation, acquired by Panta on January 1, 20X1 for $270,000 when
Santa’s common stock and retained earnings were $100,000 and
$150,000 respectively. All book values of Santa’s assets and
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patent which its fair value is equal the differential value with
remaining life of 10 years. Both firms are using FIFO method of
inventory. Followings are the transactions of merchandize between...
Following are separate income statements for Austin, Inc., and its 80 percent–owned subsidiary, Rio Grande Corporation...
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a consolidated statement for the business combination as a whole
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Austin
Rio Grande
Consolidated
Revenues
$
(738,000
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$
(538,000
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$
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Cost of goods sold
438,000
262,000
700,000
Operating expenses
138,000
108,000
271,000
Equity in earnings of Rio Grande
(114,400
)
Individual company net income
$
(276,400
)
$
(168,000
)
Consolidated net...
Following are separate income statements for Austin, Inc., and its 80 percent–owned subsidiary, Rio Grande Corporation...
Following are separate income statements for Austin, Inc., and
its 80 percent–owned subsidiary, Rio Grande Corporation as well as
a consolidated statement for the business combination as a whole
(credit balances indicated by parentheses).
Austin
Rio Grande
Consolidated
Revenues
$
(726,000
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$
(526,000
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$
(1,252,000
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Cost of goods sold
426,000
274,000
700,000
Operating expenses
126,000
96,000
247,000
Equity in earnings of Rio Grande
(104,800
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Individual company net income
$
(278,800
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$
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Worksheet Entries
Debit
Credit
Cash
100,000
Accounts Payable
100,000
To eliminate the unpaid balance for intercorporate
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Cost of Goods Sold
16,800
Income from Stylus Company
16,800
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Income from Stylus Company
196,000
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196,000
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Pencil's bookkeeper recently graduated...
During 2018, Serenity Corp., a 90%-owned subsidiary, sold inventory to Patience, Inc. (its parent) for $800,000;...
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Operating income of Patience
(excluding $900,000
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Net income of
Serenity
$500,000
Total
$1,400,000
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Consolidated
Revenues
$
(760,000
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$
(540,000
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$
(1,300,000
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Cost of goods sold
420,000
320,000
740,000
Operating expenses
120,000
66,000
215,000
Equity in earnings of Rio
Grande
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Individual company net
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$
(324,000
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$
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Consolidated net income
$
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$
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$
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Cost of goods sold
413,000
313,000
726,000
Operating expenses
114,000
83,000
235,000
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Individual company net income
$
(282,000
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$
(130,000
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Consolidated net income
$
(304,000
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