Please treat the following - (1) (2) and (3) as separate units:
Question 1: Bay Company owned 70% of the voting common stock of Clay Corporation. Clay Corporation owned 20% of Bay Company. For 2011, Bay Company and Clay Corporation reported net income (not including the investment) of $600,000 and $300,000 respectively. Bay Company and Clay paid dividends of $80,000 and $60,000 respectively. Prepare a schedule showing Bay Company's share of consolidated net income for 2011 using the treasury stock approach.
Question 2: Kurton Inc. owned 90% of Luvyn Corporation's voting common stock. The consideration paid exceeded book value by $110,000. Of this amount, one half is attributable to a patent and is to be amortized over 5 years. Luvyn held 20% of Kurton's voting common stock which cost $28,000 more than fair value.
During the current year, Kurton reported operating income of $224,000 and dividend income from Luvyn of $37,800. At the same time, Luvyn reported operating income of $70,000 and dividend income from Kurton of $19,600. Prepare a schedule to show consolidated net income.
Question 3: Wilkins Inc. owned 60% of Motumbo Company, During the current year, Motumbo reported net income of $280,000 but paid a total cash dividend of only $56,000. Assuming an income tax rate of 30%, what amount of Deferred Income Tax Liability arising this year must be recognized in the consolidated balance sheet?