Reference no: EM132554544
P owns 55% of S. The 2019 income statements of both companies are shown below. The fiscal year end is December 31. Assume a tax rate of 35%
P S
Gross Profit $80,000 $60,000
Miscellaneous Expenses $20,000 $20,000
Depreciation Expense $30,000 $15,000
Income Tax Expense $10,500 $ 8,750
Net Income $19,500 $ 16,250
On July 1, 2019, S sold equipment to P at a profit of $9,000 (before tax). The equipment had a remaining useful life of 25 years on that date. At the end of 2019, S declared and paid a $3,000 dividend. (to provide guidance on an approach to respond to this question, see the template on the next page).
Required:
Question 1. Calculate the 2019 Consolidated Net Income as at December 31, including the share attributable to the non-controlling interest.
Question 2. Calculate the amount of income tax expense as at December 31 appearing on the 2019 Consolidated Income Statement.
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