FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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$2,064,000
$2,066,000
Carlson, Incorporated owns 80% of Madrid, Incorporated. Carlson reports net income for 2024 (without consideration of its investment in Madrid) of
$1,500,000. For the same year, Madrid reports net income of $705,000. Carlson had bonds payable outstanding on January 1, 2024, with a
carrying value of $1,200,000. Madrid acquired the bonds on the open market on January 3, 2024, for $1,090,000. For the year 2024, Carlson
reported interest expense on the bonds in the amount of $96,000, while Madrid reported interest income of $94,000 for the same bonds.
Assuming there are no excess amortizations or other intra-entity transactions, what is Carlson's share of consolidated net income?
$2,207,000
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Transcribed Image Text:Multiple Choice $2,064,000 $2,066,000 Carlson, Incorporated owns 80% of Madrid, Incorporated. Carlson reports net income for 2024 (without consideration of its investment in Madrid) of $1,500,000. For the same year, Madrid reports net income of $705,000. Carlson had bonds payable outstanding on January 1, 2024, with a carrying value of $1,200,000. Madrid acquired the bonds on the open market on January 3, 2024, for $1,090,000. For the year 2024, Carlson reported interest expense on the bonds in the amount of $96,000, while Madrid reported interest income of $94,000 for the same bonds. Assuming there are no excess amortizations or other intra-entity transactions, what is Carlson's share of consolidated net income? $2,207,000 6 3 Saved < Prev 5 of 20 0 0 activity/question-g... Next > Help Save & Exit Sub Sep 16
cation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fnewconnect.mheducation.com%252F#/activity/c
$2,064,000
$2,066,000
$2,207,000
$2,176,000
$2,317,000
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Transcribed Image Text:cation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fnewconnect.mheducation.com%252F#/activity/c $2,064,000 $2,066,000 $2,207,000 $2,176,000 $2,317,000 < Prev Saved 5 of 20 Next > Help
Expert Solution
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Step 1: Introduction

Carlson owns 80% of Madrid Inc. 

Therefore Carlson share of net income from Madrid Inc = $705,000 × 80%

= $564,000


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