Answer:
d) 200,000
Explanation:
Grey Inc. owned 90% of Winn Corp, which is classified as subsidiary and is accounted for by consolidating the financial statements of the subsidiary.
Grey Inc. owned 20% of Carr Corp. and does not have significant influence so indicating that the investment is supposed to be classified at fair value.
Consolidation Method of accounting involves adding all assets and liabilities of the subsidiary in the financial statements of Parent Company. However, inter company balances (receivable / payable) are eliminated and thus are not included in consolidated financial statements to avoid double counting, thus the balance receivable from Winn Corp, is not included in the consolidated balance sheet of Grey Inc.
Change in fair value of Carr Corp is taken either in profit / loss or directly taken to statement of changes in equity depending on the policy of Grey Inc. However any receivable / payable between shareholder and the invested company appears as it is in the balance sheet, therefore the balance of $200,000 receivable from Carr Corp shall appear as receivable in consolidated balance sheet of Grey Inc.
Based on the calculation below, incremental after-tax operating cash flow is $675,000
<h3>How to calculate incremental after-tax operating cash flow</h3>
This can be calculated as follows:
Profit before interest and tax = Revenue - Operating costs – Depreciation = $1,000,000 - $200,000 - $300,000 = $500,000
Operating income = Profit before tax – (Profit before tax * Tax rate) = $500,000 – ($500,000 * 25%) = $375,000
Therefore, we have:
Incremental after-tax operating cash flow = Operating income + Depreciation = $375,000 + $300,000 = $675,000
Learn more about cash flows here: brainly.com/question/18301011.
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Answer:
$4,000, $0.
Explanation:
On January 1, X9, Gerald received his 50% profits and capital interest in High Air, LLC in exchange for $2,000 in cash and real property with a $3,000 tax basis secured by a $2,000 nonrecourse mortgage. High Air reported a $15,000 loss for its X9 calendar year.
Basis = Contribution into partnership + Appropriated Profit
Basis = ($2,000 equity + $2,000 real estate) + $0 = $4,000
There was no cash distribution during the year hence, the investor can claim a loss of $4,000
Expenses to be deducted but there were no expenses
Therefore net reportable loss = $4,000 Basis - $0 Expenses incurred = $4,000