18. Parent Co. Acquired 80% of subsidiary Co. for $300,000. On January 1, 2012 w

Question

18. Parent Co. Acquired 80% of subsidiary Co. for $300,000. On January 1, 2012 when subsidiary’s book value was $280,000. The subsidiary stock was not actively traded. On the date of acquisitions, Subsidiary had equipment (with a 10 year life) that was undervalued in the financial records by $95,000. One year later, the following selected figures were reported by the two companies (stockholders’ equity account have been omitted). Additionally, no dividends have been paid.

--- --------------------Parent…….......………….Subsidiary ---------------------------------------------

.......................Book Value…….........Book value

Current assets & investment…. 640,000……………..180,000

Buildings………………………… 150,000……………..120,000

Equipment………………………...200,000……………..110,000

Liabilities…………………………(120,000)……….....…(30,000)

Revenues………………….……..(900,000)……………(350,000)

Expenses………………………….600,000……………..250,000

Investment income……………..Not given

a. What is consolidated net income for 2012 attributable to noncontrolling interest?

b. What is the total of consolidated revenues?

c. What is the total of consolidated expenses?

d. What is the total of noncontrolling interest appearing on the balance sheet?

e. What is the consolidated total for equipment (net) at December 31?

f. What is the consolidated total of buildings?

Explanation / Answer

Parent Sub Revenue 900000 350000 Less: Expense 600000 250000 Profit 300000 100000 Parent share 100% 80% Profit for consolidation 300000 80000 Less: Excess Amortisation 7600 (95000/10)*80% Total 300000 72400 a Consolidated Net Income 300000+72400 372400 b Consolidated Revenue 900000+(350000*80%) 1180000 c Consolidated Expense 600000+(250000*80%)+7600 807600 d Non Controlling interes on acquisition date (280000+95000)*20% 75000 add: NCI During the year (350000-250000)*20% 20000 less: Excess Amortization (95000/10)*20% 1900 NCI in balance sheet 93100

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.