18. A. $706,670. B. $755,980. C. $805,280. D. $838,150. E. $815,770. 18. Beagle

Question

18.

A.

$706,670.

B.

$755,980.

C.

$805,280.

D.

$838,150.

E.

$815,770.

18.

Beagle Co. owned 80% of Maroon Corp. Maroon owned 90% of Eckston Inc. Operating income totals for 2013 are shown below; these figures contained no investment income. Amortization expense was not required by any of these acquisitions. Included in Eckston's operating income was a $56,000 unrealized gain on intra-entity transfers to Maroon.



The accrual-based income of Beagle Co. is calculated to be

A.

$706,670.

B.

$755,980.

C.

$805,280.

D.

$838,150.

E.

$815,770.

Explanation / Answer

Solution :

First we need to calculate Maroons corporations accrual based Income.

So, Maroon Corp accrual based Income will be ,

Operating income - $280,000....(1)

Add : parents portion of Subs accrual income :-

Eckstons income - $ 280,000 - $ 56,000

= $ 224,000 * 90 % = $ 201,600..... (2)

Total accrual income add (1) & (2)

= $ 481,600

Now we can calculate Beagles accrual based Income as follows :

Beagles operating income plus parents portion of sub accrual income :

$ 420,000 + ($ 481,600 * 80%)

= $ 420,000 + $385,280

=$ 805,280

Ans option C

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