1. The net incomes for Errant and Grub for the year ended December 31, 2019, were $160,000 and $90,000 respectively. Grub paid $9,000 in dividends to Errant during the year. There were no other intercompany transactions during the year. Moreover, an impairment test conducted on December 31, 2019 revealed that Goodwill should actually have a value of $20,000. Both companies use a FIFO system, and most of Grub's inventory on the date of acquisition was sold during the year. Errant did not declare any dividends during the year.
   
   Assume that any difference between the fair values and book values of the equipment, trademark, and bonds payable would all be amortized over 10 years.
   
   If Errant used the equity method to account for its investment in Grub and had a net income of $160,000 from its own operations (before maZing any entries to reflect its investment in Grub), what consolidated net income would Errant report in its consolidated income statement for the year ended December 31, 2019?

Answer rating: 100% (QA)

Grant Net Income 160000 Add Grub Net Income ... View the full answer