Peggy Company owns 75% of Sally Inc. and uses the cost method to account for its investment. The following data were taken from the Year 4 income statements of the two companies:
In Year 2, Sally sold equipment to Peggy at a gain of $15,000. Peggy has been depreciating this equipment over a five-year period. Sally did not pay any dividends in Year 4. Use income tax allocation at a rate of 40%.
(a) Calculate consolidated profit attributable to Peggy’s shareholders for Year 4.
(b) Prepare a consolidated income statement for Year 4.
(c) Calculate the deferred income tax asset that would appear on the Year 4 consolidated statement of financial position.

  • CreatedJune 08, 2015
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