What amount would Femur Co.report as consolidated net income for 2019?
A) $440,000.
B) $500,000.
C) $1,500,000.
D) $1,940,000.
E) $2,000,000.

Question

Quizplus · Accepted Answer

Femur Co. owns 80% of Tibia in 2019. Femur Co.'s net income from Tibia would be 80% of Tibia's net income of $500,000 in 2019, which is $400,000. Femur Co.'s individual net income is reported as $1,600,000. Therefore, consolidated net income would be the sum of Femur Co.'s individual net income and its share of Tibia's net income ($1,600,000 + $400,000 = $2,000,000). However, Femur Co. also had $60,000 of intercompany sales to Tibia that need to be eliminated in consolidation. Thus, the consolidated net income for 2019 is $2,000,000 - $60,000 = $1,940,000.

What Amount Would Femur Co