Carlson, Inc

question 114

Multiple Choice

Carlson, Inc.owns 80 percent of Madrid, Inc.Carlson reports net income for 2018 (without consideration of its investment in Madrid, Inc.) of $1,500,000.For the same year, Madrid reports net income of $705,000.Carlson had bonds payable outstanding on January 1, 2018 with a carrying value of $1,200,000.Madrid acquired the bonds on the open market on January 3, 2018 for $1,090,000.For the year 2018, Carlson reported interest expense on the bonds in the amount of $96,000, while Madrid reported interest income of $94,000 for the same bonds.Assuming there are no excess amortizations or other intra-entity transactions, what is Carlson's share of consolidated net income?

• A) $2,064,000.
• B) $2,066,000.
• C) $2,176,000.
• D) $2,207,000.
• E) $2,317,000.

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Definitions:

Negative Message

Communication that conveys rejection, refusal, or other unwelcome news.

Direct Format

A straightforward and clear way of presenting information, without unnecessary decorations or diversions.

Assumptions

Beliefs or ideas taken for granted without proof, often forming the basis for decision-making and reasoning.

Neutral Buffer

An unbiased or impartial intermediary area or substance that mitigates the effects of extremes or facilitates the resolution of conflicts.