Question

1. AS that, on January 1 2011 Bullins Company dovanuary 1, 2011, a Lydel Company acquires a 60% interest in Lydel Company acquire Bullins' Stockholders' Equity on the acquisition date. The a purchase price that was S600.000 over the book value of the the following (A) assets: * Equity on the acquisition date. The Lydel allocated the excess to ALAsset Initial Fair Value Useful Life (years) Patent 400,000 Goodwill 200.000 Indefinite $600,000 i ne parent and the subsidiary report the following financial statements at December 31, 2017: Income Statement Lydell Sales $4,000,000 Cost of goods sold (2.800.000) Gross Profit 1,200,000 Equity income (in Sub's Earnings) 202,800 Operating expenses (760,000) Net income $ 642.800 Bullins $2,700,000 (1.620.000) 1,080,000 (702,000) $ 378.000 Statement of Retained Earnings Lydell BOY Retained Earnings $2,009,600 Net income 642,800 Dividends (128,560) EOY Retained Earnings $2.523.840 Bullins $1,395,000 378,000 (56,700) $1.716.300 Balance Sheet Lydell Bullins $ Assets: Cash Accounts receivable Inventory Investment (Equity) PPE, net 68,100 626,400 804,600 $ 553,060 512,000 776,000 1,464,780 2.932,800 $6.238.640 1.848,600 $3,347,700

Answer 1

1. To eliminate beginning balance in subsidiary's equity, following Journal Entry will be passed:

Common Stock (in Bullins) Dr. 180000

To Investment in Bullins 108000

To Minority Interest 72000

2. To allocate Patent & Goodwill :

Patent Dr. 400000

Goodwill Dr. 200000

To Investment in Bullins 360000

To Minority Interest 240000

3. To record amortization of patent :

Amortization Expense Dr. 40000

To Patent 40000

4. Non-Controlling Interest at year end :

Particulars	Interest ($)
Common Stock	180000
Retained Earnings	1716300
Patent (400000-7(40000))	120000
Goodwill	200000
Total Interest	2216300

Therefore, Interest of NCI is 40%(2216300)=$886520.