Placid Lake Corporation acquired $80$ percent of the outstanding voting stock of Scenic, Incorporated, on January $1,2023,$ when Scenic had a net book value of $$480,000.$ Any excess fair value was assigned to intangible assets and amortized at a rate of $$6,000$ per year.

Placid Lake's $2024$ net income before consideration of its relationship with Scenic $($and before adjustments for intra$-$entity sales$)$ was $$380,000.$ Scenic reported net income of $$190,000.$ Placid Lake declared $$180,000$ in dividends during this period; Scenic paid $$48,000.$ At the end of $2024,$ selected figures from the two companies' balance sheets were as follows:

Items Placid Lake Scenic

Inventory $ $220,000$ $ $98,000$

Land $680,000280,000$

Equipment $($net$)480,000380,000$

During $2023,$ intra$-$entity sales of $$115,000($original cost of $$58,000)$ were made. Only $20$ percent of this inventory was still held within the consolidated entity at the end of $2023.$ In $2024,$ $$170,000$ in intra$-$entity sales were made with an original cost of $$67,000.$ Of this merchandise, $30$ percent had not been resold to outside parties by the end of the year.

Each of the following questions should be considered as an independent situation for the year $2024.$

Required:

What is consolidated net income for Placid Lake and its subsidiary?

Answer rating: 100% (QA)

To calculate the consolidated net income for Placid Lake and its subsidiary Scenic for the year 2024 ... View the full answer