Laurier Ltd. is the wholly owned subsidiary of Stuart Corporation. The December 31, 2018, statement of earnings for the two corporations are as follows:

Stuart					Laurier
Sales revenue			$3,200		Sales revenue			$500
Income from investment in Laurier			?
Total revenue			?		Total revenue			500
Cost of goods sold	$920				Cost of goods sold	$160
Depreciation expense	410				Depreciation expense	95
Other expenses	680		2,010		Other expenses	135		390
Net income			$?		Net income			$110

The acquisition cost of Stuart's 100% ownership interest in Laurier equaled its book value on Laurier's records. During 2018, Laurier paid a cash dividend of $25 to Stuart.

Required:

1. Calculate the income from investment in Laurier as reported on Stuart's statement of earnings.

Stuart Corporation
Calculation of Income from Subsidiary
For the Year Ended December 31, 2018
Net income reported by Laurier	$
Stuart's share of Laurier	%
Income from investment in Laurier	$

Feedback

Partially correct

2. Calculate the 2018 net income reported by the parent company (Stuart) on its statement of earnings.

Stuart Corporation
Parent Company Statement of Earnings
For the Year Ended December 31, 2018
Revenues	$
Investment income-equity method		$
Cost of goods sold
Depreciation expense
Other expenses
Net income		$

Feedback

Partially correct

3. Prepare the 2018 consolidated statement of earnings for Stuart.

Stuart Corporation
Consolidated Statement of Earnings
For the Year Ended December 31, 2018
Revenue		$
Less: Cost of goods sold
Gross margin
Less: Operating expenses
Depreciation	$
Other
Net income		$

Answer rating: 100% (QA)

answer PART 1 PART 2 PART 3 Stuart Corporation Stuart Corporation Stuar... View the full answer