A parent Company owns 100 percent of its Subsidiary. During 2015, the Parent com

Question

A parent Company owns 100 percent of its Subsidiary. During 2015, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $500,000 and the subsidiary reports net income of $200,000. The parent had a bond payable outstanding on December 31, 2015, with a carrying value equal to $420,000. The subsidiary acquired the bond on December 31, 2015 for $395,000. During 2015, the Parent reported interest expense (related to the bond) of $35,000 while the subsidiary reported NO interest income (related to the bond). What is consolidated net income for the year ended December 31, 2015?

Explanation / Answer

Particulars Amount Net Income of Holding 500000 Net income of Subsidiary 200000 Add: Income not recognised by the subsidiary 35000 Total consolidated income 735000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.