High School

We appreciate your visit to Patch Corporation purchased land from Sub1 Corporation for 350 000 on December 3 20X5 This purchase followed a series of transactions between Patch controlled subsidiaries. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!

Patch Corporation purchased land from Sub1 Corporation for $350,000 on December 3, 20X5. This purchase followed a series of transactions between Patch-controlled subsidiaries:

- On January 23, 20X5, Sub3 Corporation purchased the land from a nonaffiliate for $240,000.
- Sub3 sold the land to Sub2 Company for $220,000 on July 15, 20X5.
- Sub2 sold the land to Sub1 for $305,000 on September 5, 20X5.

Patch has control of the following companies:

| Subsidiary | Level of Ownership | 20X5 Net Income |
|------------|---------------------|-----------------|
| Sub3 | 60 percent | $60,000 |
| Sub2 | 90 percent | $140,000 |
| Sub1 | 70 percent | $90,000 |

Patch reported income from its separate operations of $345,000 for 20X5.

Based on the preceding information, what should be the amount of income assigned to the controlling shareholders in the consolidated income statement for 20X5?

A. $474,000
B. $110,000
C. $635,000
D. $525,000

Answer :

Final answer:

The total income assigned to the controlling shareholders in the consolidated income statement for 20X5 should be $570,000, accumulated from Patch's separate operations and pro-rata net income from the subsidiaries.

Explanation:

To calculate the amount of income assigned to the controlling shareholders in the consolidated income statement, we need to add up the income from Patch's separate operations and the net income from subsidiaries pro-rata with the level of ownership. The income from Patch's separate operations is $345,000. Net income from Sub3 is $60,000 * 60% = $36,000. Net income from Sub2 is $140,000 * 90% = $126,000. Net income from Sub1 is $90,000 * 70% = $63,000. Therefore, the total amount of income is $345,000 (Patch) + $36,000 (Sub3) + $126,000 (Sub2) + $63,000 (Sub1) = $570,000. So, the amount of income assigned to the controlling shareholders in the consolidated income statement for 20X5 should be $570,000.

To determine the amount of income assigned to the controlling shareholders in the consolidated income statement for 20X5, we need to analyze the series of transactions between the Patch-controlled subsidiaries and apply the ownership percentages of each subsidiary’s net income.

Learn more about Consolidated Income Statement here:

https://brainly.com/question/30709804

#SPJ11

Thanks for taking the time to read Patch Corporation purchased land from Sub1 Corporation for 350 000 on December 3 20X5 This purchase followed a series of transactions between Patch controlled subsidiaries. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!

Rewritten by : Barada