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home / study / business / accounting / accounting questions and answers / on january 1, 2012, aspen company acquired 80 percent of birch company’s outstanding voting ... Question: On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock... On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $364,000. Birch reported a $320,000 book value and the fair value of the noncontrolling interest was $91,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $108,000 when Cedar had a $108,000 book value and the 20 percent noncontrolling interest was valued at $27,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned to a trade name with a 30-year life. These companies report the following financial information. Investment income figures are not included. 2012 2013 2014 Sales: Aspen Company $ 485,000 $ 767,500 $ 892,500 Birch Company 211,500 386,000 622,300 Cedar Company Not available 263,700 240,000 Expenses: Aspen Company $ 332,500 $ 525,000 $ 635,000 Birch Company 167,000 315,000 550,000 Cedar Company Not available 244,000 210,000 Dividends declared: Aspen Company $ 10,000 $ 45,000 $ 55,000 Birch Company 8,000 18,000 18,000 Cedar Company Not available 2,000 6,000 Assume that each of the following questions is independent: . Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following unrealized gross profits at the end of each year: Date Amount 12/31/12 $13,500 12/31/13 16,200 12/31/14 30,400 What is the realized income of Birch in 2013 and 2014, respectively?

Answer 1