Investor (Ace Corp.) and Investees Income Statement (before adjustment) is as below. Account Investor (Aces Corp) s
Question:
- Investor (Ace Corp.) and Investee’s Income Statement (before adjustment) is as below.
Account | Investor (Ace’s Corp) ’s Income Statement | Investee’s Income Statement |
Sales | $500,000 | $400,000 |
Less: COGS | (250,000) | (230,000) |
Gross Profit | $250,000 | $170,000 |
Less: S & A Expenses | (100,000) | (100,000) |
Net Income | $150,000 | $70,000 |
Assume that the investee company paid $20,000 in cash dividends. The investor, Ace Corp. would prepare the following income statements, depending on the level of ownership.
- Please complete the Answer Sheet.
Ownership | 15% (Passive) | 40% (Influential) | 70% (Controlling) |
Sales | $500,000 | $500,000 | |
Less: COGS | (250,000) | (250,000) | |
Gross Profit | $250,000 | $250,000 | |
Less: S & A Exp. | (100,000) | (100,000) | |
Operating Income | $150,000 | $150,000 | |
Dividend Income | |||
Investment Income | |||
Net Income | |||
Distribution of Income | |||
Non-controlling Interest (30% x $70,000) | |||
Controlling Interest (100% of $150,000 + 70% of $70,000) |
- What if the ownership is 100%?
Ownership | 15% (Passive) | 40% (Influential) | 70% (Controlling) |
Sales | $500,000 | $500,000 | |
Less: COGS | (250,000) | (250,000) | |
Gross Profit | $250,000 | $250,000 | |
Less: S & A Exp. | (100,000) | (100,000) | |
Operating Income | $150,000 | $150,000 | |
Dividend Income | |||
Investment Income | |||
Net Income | |||
Distribution of Income | |||
Non-controlling Interest (30% x $70,000) | |||
Controlling Interest (100% of $150,000 + 70% of $70,000) |
Expert Answer:
Solution Sale 500000 500000 Less Cost of goods sold 250000 250000 Gross Profit 25... View the full answer
