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    Consolidated net income from five separate company

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    Dryburgh Corporation acquired 80 percent of the voting common stock of Burns Company on January 1, 2002. The acquisition cost included a $40,000 purchase differential assigned to equipment with an estimated life of 5 years. Burns Company owns 70 percent of the voting common stock of Leith, Inc., acquired at underlying book value 3 years ago. Burns also owns 10 percent of Hawes Company which, in turn, owns 30 percent of the voting stock of Moffatt Corporation. Separate operating income and dividend data for the 5 companies for the year ended December 31, 2003 is presented below:

    Income Dividends
    Dryburgh $350,000 $120,000
    Burns 300,000 80,000
    Leith 200,000 180,000
    Hawes 200,000 80,000
    Moffatt 60,000 40,000

    Compute Consolidated net income for 2003.

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    **Consolidated income for Hawes**

    Net Income 200000
    Add: Moffatt share of profit in Hawes(20000 * .30) 6000
    Add: Dividends declared by Hawes ...

    Solution Summary

    The consolidated net income from five separate company is examined.