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Intercompany sale of depreciable assets Assume on January 1, 2015, a parent company a 75% interest...

Intercompany sale of depreciable assets

Assume on January 1, 2015, a parent company a 75% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. On January 1, 2017, the subsidiary purchased a building for $576,000. The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2019, the subsidiary sold the building to the parent for $504,000. The parent estimated that the building has a six year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2019, the parent's "stand-alone" income (i.e., net income before recording any adjustments related to pre-consolidation investment accounting) is $600,000. The subsidiary's recorded net income is $120,000.

Consolidated net income attributable to the controlling interest:

A)$702,000

B)$690,000

C)$630,000

D)$645,000

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Answer #1

consolidated net income attributable to the controlling interest $ 645000

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