PLEASE SHOW THE STEPS TO GET TO THE ANSWER 40. Keefe, Inc., a calendar-year corp

Question

PLEASE SHOW THE STEPS TO GET TO THE ANSWER

40. Keefe, Inc., a calendar-year corporation, acquires 70% of George Company on September 1, 2010, and an additional 10% on April 1, 2011 . Total annual amortization of $6,000 relates to the first acquisition. George reports the following figures for 2 $500,000 400,000 300,000 50,000 200,000 Revenues Expenses Retained earnings, 1/1/11 Dividends paid Common stock Without regard for this investment, Keefe independently earns $300,000 in net income during 2011. All net income is earned evenly throughout the year. What is the controlling interest in consolidated net income for 2011? A. $373,300 B. S372,850. C. $371,500 D. $376,000. E. $372,805.

Explanation / Answer

a)Income For calendar year 2011 for Geoge =Revenue-expense -amortisation

        = 500000-400000-6000

          = 94000

Income to be reported in consolidated financial statement = 300000Keefe Income +72850 Share in subsiduary

     = 372850

correct option is "B"

Income Distribution schedule of George Income from 1 Jan 2011-31 march 2011 (3 months) 1April 2011-31 december 2011 (9 months) % Of holding 70% 70+10 =80% Income allocation during the period 94000*3/12=23500 94000*9/12=70500 share of controlling interest in Income of george 23500*.70=16450 70500*.80= 56400 Total Income :16450+56400= 72850

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