Pad Corporation acquired an 80 percent interest in Sot Company at book value a number of years
Question:
Pad Corporation acquired an 80 percent interest in Sot Company at book value a number of years ago.
Separate incomes of Pad and Sot for 2011 were $120,000 and $60,000, respectively. The only transactions between
Pad and Sot during 2011 were as follows:
1. Pad sold inventory items to Sot for $60,000. These items cost Pad $30,000, and half the items were inventoried at $30,000 by Sot at December 31, 2011.
2. Sot sold land that cost $70,000 to Pad for $96,000 during 2011. The land was held by Pad at December 31, 2011.
3. Sot paid $24,000 dividends to Pad during 2011.
REQUIRED: Compute consolidated net income for Pad Corporation and Subsidiary for 2011 under:
1. Traditional theory
2. Parent-company theory
3. Entity theory
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Advanced Accounting
ISBN: 9780132568968
11th Edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith