acquisition. Triumph reported common stock outstanding of $80,000 and retained earnings of $270,000. The differential is assigned to buildings with an expected life of 10 years at th of acquisition. On December 31, 20X4, Lexus had $10,000 of unrealized profits on its books from inventory sales to Triumph, and Triumph had $15,000 of unrealized profit on its books from inventor sales to Lexus. All inventory held at December 31, 20X4, was sold during 20X5. On December 31, 20X5, Lexus had $12,000 of unrealized profit on its books from inventory sales to Triumph, and Triumph had unrealized profit on its books of $28,000 from inventory to Lexus. In 20X5 Triumph reported net income of $160,000. The amount Lexus will report as Income from Triumph Company for year 20X5 would be: O $100,900. O $99.600. O $98,800. O $97,400.
acquisition. Triumph reported common stock outstanding of $80,000 and retained earnings of $270,000. The differential is assigned to buildings with an expected life of 10 years at th of acquisition. On December 31, 20X4, Lexus had $10,000 of unrealized profits on its books from inventory sales to Triumph, and Triumph had $15,000 of unrealized profit on its books from inventor sales to Lexus. All inventory held at December 31, 20X4, was sold during 20X5. On December 31, 20X5, Lexus had $12,000 of unrealized profit on its books from inventory sales to Triumph, and Triumph had unrealized profit on its books of $28,000 from inventory to Lexus. In 20X5 Triumph reported net income of $160,000. The amount Lexus will report as Income from Triumph Company for year 20X5 would be: O $100,900. O $99.600. O $98,800. O $97,400.
Chapter8: Consolidated Tax Returns
Section: Chapter Questions
Problem 25CE
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Transcribed Image Text:Lexus Corporation acquired 70 percent of Triumph Corporation's voting stock on January 1, 20X2, for $280,000. The fair value of the noncontrolling interest was $120,000 at the date of
acquisition. Triumph reported common stock outstanding of $80,000 and retained earnings of $270,000. The differential is assigned to buildings with an expected life of 10 years at the dat
of acquisition.
On December 31, 20X4, Lexus had $10,000 of unrealized profits on its books from inventory sales to Triumph, and Triumph had $15,000 of unrealized profit on its books from inventory
sales to Lexus. All inventory held at December 31, 20X4, was sold during 20X5.
On December 31, 20X5, Lexus had $12,000 of unrealized profit on its books from inventory sales to Triumph, and Triumph had unrealized profit on its books of $28,000 from inventory sales
to Lexus.
In 20X5 Triumph reported net income of $160,000. The amount Lexus will report as Income from Triumph Company for year 20X5 would be:
$100,900.
O $99,600.
O $98,800.
O $97,400.
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