Blue Corporation holds 70 percent of Black Company\'s voting common stock. On Ja
ID: 2446393 • Letter: B
Question
Blue Corporation holds 70 percent of Black Company's voting common stock. On January 1, 20X3, Black paid $500,000 to acquire a building with a 10-year expected economic life. Black uses straight-line depreciation for all depreciable assets. On December 31, 20X8, Blue purchased the building from Black for $180,000. Blue reported income, excluding investment income from Black, of $140,000 and $162,000 for 20X8 and 20X9, respectively. Black reported net income of $30,000 and $45,000 for 20X8 and 20X9, respectively. What amount will be reported as consolidated net income 20X9?
Explanation / Answer
Book Value of Building Sold = 500000 - 500000/10 * 6
Book Value of Building Sold = 200000
Sale Value = 180000
Gain on Sale = 20000
Depreciation on Gain on sale reversed in 2019 = 20000/4 = 5000
Amount to be reported as consolidated net income for 20X9 = 162000+45000 - 5000
Amount to be reported as consolidated net income for 20X9 = 202000
Answer
$202,000