azz Corporation receives management consulting services from its 90 percent owned subsidiary, Laker Inc. During
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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?
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- Denver Co. and Colorado Co. are joint operators in the production of VOS printers. Each joint operator retains control over the assets it has contributed to the joint operation and shares equally in the profits and losses of the joint operation. During the year Denver Co. earns revenue of P8,000,000 from its own operations. Sales of VOS printers amounts to P3,000,000. How much total revenue shall be reported in Denver Co.'s statement of profit or loss for the year? A. P8,000,000B. P9,500,000 C. P11,000,000 D. P5,500,000Tech Co. and Robotics Co. are joint venturers of Mecha Co., a producer of high tech machinery. Tech and Robotics, each have a 50% interest in the net assets of Mecha Co. During the year, Tech Co. earns revenue of P1,000,000 from its own operations while Mecha Co. reports revenue of P400,000. How much total revenue shall be reported in Tech Co.'s statement of profit or loss for the year?ABC Co. and DEF Co. are joint venturers of XYZ Co., a producer of high tech machinery. ABC and DEF, each have a 50% interest in the net assets of XYZ Co. During the year, ABC Co. earns revenue of $1,000,000 from its own operations while DEF Co. reports revenue of $400,000. How much total revenue shall be reported in ABC Co.'s statement of profit or loss for the year? 1,000,000 1,200,000 1,400,000 either a orb
- Padlock Corp. owns 90 percent of Safeco, Inc. During the year, Padlock sold 3,000 locking mechanisms to Safeco for $900,000. By the end of the year, Safeco had sold all but 500 of the locking mechanisms to outside parties. Padlock marks up the cost of its locking mechanisms by 60 percent in computing its sales price to affiliated and nonaffiliated customers. How much intra-entity profit remains in Safeco’s inventory at year-end?At the beginning of the year, Clampett, Inc. had $100,000 in its AAA, $60,000 of earnings and profits from prior C corporation years. During the year, Clampett, Inc. earned $50,000 of ordinary income and paid $200,000 in distributions to its shareholders. Assume that J. D. owns 25% of Clampett, Inc., his basis in Clampett, Inc. at the beginning of the year is $10,000, and his share of the distribution was $50,000. How much income does J. D. recognize this year from these transactions? $10,000. $0. $40,000. $17,500. None of the choices are correct.Hillsborough Country Outfitters, Inc., entered into an agreement for HCO Media LLC to exclusively conduct Hillsborough’s e-commerce initiatives through a jointly owned (50 percent each) Internet site known as HCO.com. HCO Media receives 2 percent of all sales revenue generated through the site up to a maximum of $500,000 per year. Both Hillsborough and HCO Media pay 50 percent of the costs to maintain the Internet site. However, if HCO Media’s fees are insufficient to cover its 50 percent share of the costs, Hillsborough absorbs the loss.Assuming that HCO Media qualifies as a VIE, should Hillsborough consolidate HCO Media LLC?
- Company G, which has a 30 percent marginal tax rate, owns a controlling interest in Company J, which has a 12 percent marginal tax rate. Both companies perform engineering services. Company G is negotiating a contract to provide services for a client. Upon satisfactory completion of the services, the client will pay $100,000 cash. Required: Compute the after-tax cash from the contract assuming that Company G is the party to the contract and provides the services to the client. Compute the after-tax cash from the contract assuming that Company J is the party to the contract and provides the services to the client. Compute the after-tax cash flow for Company G from the contract assuming that Company J is the party to the contract, but Company G actually provides the services to the client.Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2021, the company adopted a plan to sell the assets of the division. The actual sale was completed on December 15, 2021, at a price of $800,000. The book value of the division’s assets was $1,410,000, resulting in a before-tax loss of $610,000 on the sale.The division incurred a before-tax operating loss from operations of $260,000 from the beginning of the year through December 15. The income tax rate is 25%. Chance’s after-tax income from its continuing operations is $750,000. Required:Prepare an income statement for 2021 beginning with income from continuing operations. Include appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding throughout the year. (Amounts to be…Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2021, the company adopted a plan to sell the assets of the division. The actual sale was completed on December 15, 2021, at a price of $600,000. The book value of the division’s assets was $1,000,000, resulting in a before-tax loss of $400,000 on the sale. The division incurred a before-tax operating loss from operations of $120,000 from the beginning of the year through December 15. The income tax rate is 25%. Chance’s after-tax income from its continuing operations is $550,000.Required:Prepare an income statement for 2021 beginning with income from continuing operations. Include appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding throughout the year.
- A parent company paid $500,000 for a 100% interest in a subsidiary. At the end of the first year, the subsidiary reported net income of $40,000 and paid $5,000 in dividends. The price paid reflected understated equipment of $70,000, which will be amortized over 10 years. What would be the subsidiary income reported on the parent’s unconsolidated income statement, and what would the parent’s investment balance be at the end of the first year under each of these methods? a. The simple equity method b. The sophisticated equity method c. The cost methodABC Co. and XZY Corp .are joint operators in the development of DDD, an internet provider. Each join operator retains control over the assets contributed to the joint operation and share equally in the profits and losses of the join operation. During the year, ABC Co. earns revenue of P1,000,000 from its own operation. Sales of DDD amount to P800,000. How much total revenue shall be reported in ABC Co.’s statement of profit or loss or the year? 1,000,000 1,200,000 1,400,000 1,500,000During 20X1, Blue Corporation sold products for $2,500,000 (gross amount) with the sales returns and allowances of $50,000. The company incurred selling expenses for $120,000 and administrative expenses for $330,000. During the year, the company purchased 23,000 common shares of Francis Corporation at $8 per share and recorded the FV-NI investments, and purchased 18,000 shares of Davis Corporation at $12 per share and recorded the FV-OCI investments. On December 31, 20X1, the share prices of Francis Corporation and Davis Corporation were $11 per share and $10 per share, respectively. The company recognized interest expense for $62,000. The beginning-of-year balance of inventory was $640,000 and the end-of-year balance of inventory was $590,000. During the year, the company purchased inventory for $1,600,000. On September 1, 20X1, the company discontinued operation of a division that had a loss of $150,000 for its operation in 20X1. The discontinued division had the carrying value…