On January 1, 2007, Slaughter sold equipment to Bennett (a wholly owned subsidiary) for $120,000 in cash. The equipment had originally cost $100,000 but had a book value of only $70,000 when transferred. On that date, the equipment had a 5 year remaining life. Depriciation expense is computed using the straight line method. Slaughter earned $220,000 in net income in 2007 (not including investment income) while Bennett reported $90,000.

A. What is the consolidated net income for 2007?
B. What is the consolidated net income for 2007 if Slaughter only owns 90% of Bennett
C. What is the consolidated net income for 2007 if Slaughter only owns 90% of Bennett and the equipment transfer was upstream?
D. What is the consolidated net income for 2008 if Slaughter reports $240,000 (doesn't include the investment income) and Bennett $100,000 in income? Assume that Bennett is a wholly owned subsidiary and the equipment transfer was downstream.

newlen5990

I am suprised that I was able to stump so many people with my 2 questions

CaptainForest

You haven't stumped us, we just don't feel like doing your homework for you.

newlen5990

I wasn't asking you to do my homework, I am asking for help. I have struggled with these 2 questions for 2 weeks before I posted them. I have been to the tutoring lab and they don't offer tutoring in this subject at my university. I ordered a study guide to go with my book and I yet still have no example to do these 2 problems. I was hoping that someone could explain to me in a manner that I can understand because the book and my instructor at times are hard to understand. I was able to get help from my last university that I transferred from so thanks anyway. I am insulted that you would think that I would want anyone to do my homework. I just wanted it explained to me. Thanks anyway I am sorry that you are so quick to judge someone without knowing them.