Question: Consolidated Financial Statements Ace Mining Company (the parent) acquired 100% of the common stock of Alberta Development (the subsidiary) for $300,000 on January 2, 20X1. Their financial statements follow:
1. What would be Ace Mining's net income for 20X1 if it had not purchased the Alberta Development stock?
2. After acquiring the Alberta Development stock, Ace Mining prepared its income statement by showing its claim to Alberta's income as part of "other income." Prepare a consolidated income statement for 20X1 and a consolidated balance sheet as of December 31, 20X1. Use the balancesheet-equation format for the latter.
3. Suppose Ace Mining Company bought only 60% of Alberta Development Company for $180,000. Therefore, Ace Mining's revenue and other income for 20X1 is $5,420,000, not $5,500,000. Prepare a consolidated income statement and a consolidated balance sheet. Use the balance-sheetequation format for the latter.