On January 1, 2018, Ackerman sold equipment to Brannigan (awholly owned subsidiary) for $250,000 in cash. The equipment hadoriginally cost $225,000 but had a book value of only $137,500 whentransferred. On that date, the equipment had a five-year remaininglife. Depreciation expense is computed using the straight-linemethod.
Ackerman reported $350,000 in net income in 2018 (not includingany investment income) while Brannigan reported $114,500. Ackermanattributed any excess acquisition-date fair value to Brannigan'sunpatented technology, which was amortized at a rate of $4,500 peryear.
a.) What is consolidated net income for2018?
b.) What is the parent's share of consolidated netincome for 2018 if Ackerman owns only 90 percent ofBrannigan?
c.) What is the parent's share of consolidated netincome for 2018 if Ackerman owns only 90 percent of Brannigan andthe equipment transfer was upstream?
d.) What is the consolidated net income for 2019 ifAckerman reports $370,000 (does not include investment income) andBrannigan $125,000 in income? Assume that Brannigan is a whollyowned subsidiary and the equipment transfer wasdownstream.
