Grasper Corporation owns 60 percent of Latent Corporation’s common stock and 20

Question

Grasper Corporation owns 60 percent of Latent Corporation’s common stock and 20 percent of Dally Corporation’s common stock. In addition, Latent owns 60 percent of Dally’s stock. In 20X6, Grasper, Latent, and Dally reported operating income of $95,000, $60,000, and $50,000 and paid dividends of $45,000, $25,000, and $10,000, respectively.

a.What amount of consolidated net income will Grasper report for 20X6? $205,000

b.What amount of income will be assigned to the noncontrolling interest in the 20X6 consolidated income statement?

c.What amount of income will be assigned to the controlling interest in the 20X6 income statement?

d.What amount will be reported as dividends declared in Grasper’s 20X6 consolidated retained earnings statement?

Explanation / Answer

a. Consolidated Net income reported by Grasper = 95000 + 60000 + 50000 = $205000

b. Income assigned to non controlling interest = [95000+60000+50000] - 159000 = $46000

c. Income of Dally owned by Latent = 50000*60% = $30000

Total Income of Latent = 60000 + 30000 = $90000

Income of Dally owned by grasper = 50000x20% = $10000

Income of Latent owned by Grasper = 90000 x 60% = $54000

Net Income assigend to the controlling interest = 95000 + 54000 + 10000

= $159000

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