Question

Kearns Inc. owned all of Burke Corp. For 2021, Kearns reported net income (without consideration of...

Kearns Inc. owned all of Burke Corp. For 2021, Kearns reported net income (without consideration of its investment in Burke) of $350,000 while the subsidiary reported $127,000. There are no excess amortizations associated with this consolidation. The subsidiary had bonds payable outstanding on January 1, 2021, with a book value of $303,000. The parent acquired the bonds on that date for $285,000. During 2021, Kearns reported interest income of $32,000 while Burke reported interest expense of $29,000. What is consolidated net income for 2021?

Group of answer choices $456,000. $462,000. $477,000. $492,000. $498,000.

Business   Accounting   
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Answer #1
Answer

Computation of consolidated net income for 2021
Amount
Naet Income of Cannon for 2017 $      350,000
Add: Gain from Acquisition of bond (303,000 - 285,000) $        18,000
Net income of subsidiary for 2017 $      127,000
Less: Difference of interest dueto amortization of discount benefit -$          3,000
Consolidated net income for 2021 $      492,000
Option D is correct
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