On January 2,2012,Pal Corporation Sold Warehouse Equipment to SimCo,a Wholly-Owned

question 30

Essay

On January 2,2012,Pal Corporation sold warehouse equipment to SimCo,a wholly-owned subsidiary.The equipment had an original cost of $130,000 and a net book value of $100,000 when it was sold to SimCo for $150,000.Both companies agreed that the equipment had a five-year remaining life and compute depreciation on the straight-line method.The equipment has no salvage value.
Pal reported $470,000 in net income in 2012 (prior to reporting any income from SimCo),and SimCo reported $160,000 in net income.
Required:
1.Calculate consolidated net income for 2012.
2.Determine the controlling share of net income for the year if Pal only owned 75% of SimCo.
3.Determine the controlling share of net income for the year if Pal only owned 75% of SimCo AND the equipment transfer was upstream.

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Definitions:

Extension

The movement by which the two ends of any jointed part are drawn away from each other, increasing the angle between them.

Adduction

The movement of a limb or other body part toward the midline of the body or toward another body part.

Flexion

The action of bending or the condition of being bent, especially of a joint or muscle.

Synovial Joint

A type of joint that is enclosed within a capsule containing synovial fluid, allowing for smooth movement between bones.