Blue Corporation holds 70 percent of Black Company\'s voting common stock. On Ja

Question

Blue Corporation holds 70 percent of Black Company's voting common stock. On January 1, 20X3, Black paid $500,000 to acquire a building with a 10-year expected economic life. Black uses straight-line depreciation for all depreciable assets. On December 31, 20X8, Blue purchased the building from Black for $180,000. Blue reported income, excluding investment income from Black, of $140,000 and $162,000 for 20X8 and 20X9, respectively. Black reported net income of $30,000 and $45,000 for 20X8 and 20X9, respectively. What amount will be reported as consolidated net income 20X9?

Explanation / Answer

Book Value of Building Sold = 500000 - 500000/10 * 6

Book Value of Building Sold = 200000

Sale Value = 180000

Gain on Sale = 20000

Depreciation on Gain on sale reversed in 2019 = 20000/4 = 5000

Amount to be reported as consolidated net income for 20X9 = 162000+45000 - 5000

Amount to be reported as consolidated net income for 20X9 = 202000

Answer

$202,000

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