Show your solution. Transcribed Image Text: Cassowary Corporation acquired a 70% interest in Fruit Corporation in
1999 at a time when Fruit’s book values and fair values were equal.
In 2003, Fruit sold land to Cassowary for $82,000 that cost $72,000.
The land remained in Cassowary’s possession until 2005 when Cassowary
sold it outside the combined entity for $102,000.
After the books were closed in 2005, it was discovered that Cassowary
had not considered the unrealized gain from its intercompany purchase
of land in preparing the consolidated financial statements. The only
entry on Cassowary’s books was a debit to Land and a credit to Cash
in 2003 for $82,000, and, in 2005, a debit to Cash for $102,000 and
credits to Land for $82,000 and Gain on sale of land for $20,000.
of the error,
Before the discovery
statements disclosed the following amounts:
the
consolidated financial
2003
2004
2005
$ 750,000
910,000
300,000
Consolidated net income
600,000
Land
200,000
240,000
Required:
1. Determine the
correct
amounts
of consolidated net
income for
2003, 2004, and 2005.