Lexus Corporation acquired 70 percent of Triumph Corporation's voting stock on January 1, 20X2, for $280,000. The fair value of the noncontrolling interest was $120,000 at the date of acquisition. Triumph reported common stock outstanding of $80,000 and retained earnings of $270,000. The differential is assigned to buildings with an expected life of 10 years at the da of acquisition. On December 31, 20X4, Lexus had $10,000 of unrealized profits on its books from inventory sales to Triumph, and Triumph had $15,000 of unrealized profit on its books from inventory sales to Lexus. All inventory held at December 31, 20X4, was sold during 20X5. On December 31, 20X5, Lexus had $12,000 of unrealized profit on its books from inventory sales to Triumph, and Triumph had unrealized profit on its books of $28,000 from inventory sales to Lexus. In 20X5 Triumph reported net income of $160,000. The amount Lexus will report as Income from Triumph Company for year 20X5 would be: O $100,900. O $99,600. O $98,800. O $97,400.

Lexus Corporation acquired 70 percent of Triumph Corporation's voting stock on January 1, 20X2, for $280,000. The fair value of the noncontrolling interest was $120,000 at the date of acquisition. Triumph reported common stock outstanding of $80,000 and retained earnings of $270,000. The differential is assigned to buildings with an expected life of 10 years at the da of acquisition. On December 31, 20X4, Lexus had $10,000 of unrealized profits on its books from inventory sales to Triumph, and Triumph had $15,000 of unrealized profit on its books from inventory sales to Lexus. All inventory held at December 31, 20X4, was sold during 20X5. On December 31, 20X5, Lexus had $12,000 of unrealized profit on its books from inventory sales to Triumph, and Triumph had unrealized profit on its books of $28,000 from inventory sales to Lexus. In 20X5 Triumph reported net income of $160,000. The amount Lexus will report as Income from Triumph Company for year 20X5 would be: O $100,900. O $99,600. O $98,800. O $97,400.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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