Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1,
ID: 2394753 • Letter: F
Question
Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2019. During 2019, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of fair value allocations totaled $60,000 in 2019. Not including its investment in Harbor, Femur Co. had its own revenues of $4,500,000 and expenses of $3,000,000 for the year 2019. A.) What amount of consolidated net income for 2019 should be allocated to Femur’s controlling interest in Harbor? B.) What amount would Femur Co. report as consolidated net income for 2019?
Explanation / Answer
A.) What amount of consolidated net income for 2019 should be allocated to Femur’s controlling interest in Harbor?
Harbor
Revenue 2,500,000
Less:- expenses 2,000,000
Income 500,000
Share of Femur @ 70% 350,000
B.) What amount would Femur Co. report as consolidated net income for 2019?
Net Income of femur (Revenue-expenses) (4,500,000-3,000,000)= 1,500,000
Add:- share of income from Harbor 350,000
Less:- Amortisation of fair value 60,000
Consolidated net income for 2019 (1500000+350000-60000) 1,790,000
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