Question

Question 25:

Wilson owned equipment with an estimated life of 10 years when the equipment was acquired for an original cost of $80,000. The equipment had a book value of $50,000 at January 1, 2017. On January 1, 2017, Wilson realized that the useful life of the equipment was longer than originally anticipated, at ten remaining years.

On April 1, 2017 Simon Company, a 90% owned subsidiary of Wilson Company, bought the equipment from Wilson for $68,250 and for depreciation purposes used the estimated remaining life as of that date. The following data are available pertaining to Simon's income and dividends declared:

	2017			2018			2019
Net income	$	100,000		$	120,000		$	130,000
Dividends declared		40,000			50,000			60,000

Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, compute Wilson's share of income from Simon for consolidation for 2018.

$108,000.

$106,000.

$109,800.

$109,825.

$110,000.

Answer 1

Since Wilson holds a 90% share in the subsidiary. Wilson's share of income from Simon for consolidation for 2018. =

90%*120000 = $108000