REFERENCE: Ref.07_06 Chase Company Owns 80% of Lawrence Company and 40% of 40

question 43

Multiple Choice

REFERENCE: Ref.07_06
Chase Company owns 80% of Lawrence Company and 40% of Ross Company.Lawrence Company also owns 30% of Ross Company.Separate operating incomes for 2009 of Chase,Lawrence,and Ross are $450,000,$300,000,and $250,000,respectively.Each company also retains a $20,000 unrealized gain in their current income figures.Annual amortization expense of $15,000 is assigned to Chase's investment in Lawrence and another $15,000 is assigned to Lawrence's investment in Ross.
-Compute Chase's accrual-based income for 2009.

• A)$746,000.
• B)$719,000.
• C)$779,600.
• D)$774,200.
• E)$758,100.

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Definitions:

Informal Documentation

Non-official records or papers that may not be formally recognized but can provide insight or evidence into particular areas or situations.

Implied Authority

Authority of an agent that is not explicitly stated but is assumed to be granted in order to conduct the necessary activities to fulfill the agent's duties.

Partnership Agreement

A contract between two or more individuals who agree to manage and operate a business together, sharing its profits and losses.

Individual or Group

Describes either a single person or a collection of persons considered together in context.