8. The Parent has 70% interest in Bill Inc. The separate-entity R/E statements of the two companies as of Dec 31, 2019 are below:

At the beginning of 2019, the accounting books of the Parent suggest the followings associated with the inventories the Parent purchased from Bill during 2018:

Before-tax profit Tax expense After-tax profit $6,000 $2,400 $3,600

Assuming the Parent uses cost method for equity investments, adjustments based on the given information will show an impact on the Parent\'s portion in the consolidated net income of Parent Bill.

Beginning                        $100,000       $30,000

Net income                      10,000           3,000

Dividends declared            2,000            0

Year-end                          108,000        33,000

a)   $3,600 increase 


b)   $4,620 increase 


c)   $6,000increase

d)   $2,520 increase 


Answer rating: 100% (QA)

Question Answer 8 Option D is c... View the full answer