On January 1, 2013, Musial Corp. sold equipment to Matin Inc. (a wholly-owned su
ID: 2445989 • Letter: O
Question
On January 1, 2013, Musial Corp. sold equipment to Matin Inc. (a wholly-owned subsidiary) for $168,000 in cash. The equipment originally cost $140,000 but had a book value of only $98,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense was calculated using the straight-line method. Musial earned $308,000 in net income in 2013 (not including any investment income) while Matin reported $126,000. Assume there is no amortization related to the original investment.
Prepare a schedule of consolidated net income and the share to controlling and non-controlling interests for 2013, assuming that Musial owned only 90% of Matin and the equipment transfer had been upstream
Explanation / Answer
Martin Inc. gain on sale = 168,000-98,000 = 70,000
Musical corp. depreciation = 168,000/5 = 33,600
Particulars
Amount
Amount
Net income
308,000
Add:
Gain on sale
70,000
Total Net income
378,000
Controlling and non-controlling interest:
Particulars
Musical
Martin
Net income
3,78,000
1,26,000
Controlling interest
3,78,000
1,13,400
Non-controlling interest
-
12,600
Particulars
Amount
Amount
Net income
308,000
Add:
Gain on sale
70,000
Total Net income
378,000
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