X Company acquired an 80% stake in y Company on January 1, 2018, when the book v

Question

X Company acquired an 80% stake in y Company on January 1, 2018, when the book value of y Company’s stockholder equity accounts was $400,000. All of the $250,000 excess fair value over book value was allocated to goodwill. There were no intra-entity transactions during the year, and y Company reported net income on its books for $160,000 for 2018. y Company also declared dividends of $40,000 in 2018. What is the noncontrolling interest ending balance in the December 31, 2018 consolidated balance sheet?

Explanation / Answer

Computation of non controlling interest Fair value at the time of acquisition i book value of y Company’s stockholder equity accounts $      400,000 ii goodwill on acquisition $      250,000 iii=i+ii Total $      650,000 iv=iii*20% Share of minority 20% $      130,000 Share in profit v y Company reported net income $      160,000 vi Less Dividend declared $       (40,000) vii=v+vi Total $      120,000 viii =vii*20% Share of minority 20% $         24,000 ix=viii+iv Net noncontrolling interest ending balance $      154,000

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