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Question: Diamond Company owns 80 percent of Emerald,


Diamond Company owns 80 percent of Emerald, and Emerald owns 90 percent of Sapphire, Inc. Separate operating income totals for the current year follow; they contain no investment income. None of these acquisitions required amortization expense. Included in Sapphire’s income is a $50,000 intra-entity gain on transfers to Emerald still in Emerald’s possession.



Diamond Company owns 80 percent of Emerald, and Emerald owns 90 -1

What is Diamond’s accrual-based net income for the year?
a. $658,400
b. $674,400
c. $666,800
d. $645,600

2.99

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