Question

On January 1, 2015, P Company acquired a 90% interest in S Company. During 2016, S Company sold merchandise to P Company at 25% above cost in the amount (selling price) of $241,800. At the end of the year, P Company had in its inventory one-third of the amount of goods purchased from S Company.

On January 1, 2016, P Company sold equipment that had a book value of $83,600 to S Company for $118,100. The equipment had an estimated remaining life of four years.

S Company reported net income of $116,100, and P Company reported net income of $293,000 from their independent operations (including sales to affiliates) for the year ended December 31, 2016.

Calculate controlling interest in consolidated net income for the year ended December 31, 2016.

Answer 1

working calentation of unrealised profit on Marchandise Hotel sold from s to pltg. and otNet imowo from some for the purpose of conistidation (Doss Profil zate on sales - cost & Mo + Margin & Loot 25 - 125 - ?.5 1100 - 24. on sales 125 onsol stoup at yeom enda 241800- 8060o . Unrealised profit - 80600720) = 16120 Het Income of & company 16,100 nes i unrealised profit 26,120 gogoo share of Contalling interest 190.4): 89,982 to share of Non. Controlling Interest (20f) 9918 Worlang Calculation of unrealised profit on Equipment sold Note 2 from I to s and Net suome ton Parent & 1 Book value on date of transfer 1.1.16 о: Ромрал- Boole value on year end 31.12.16 af equipment not transfer 83600 62,700 183 boon 83,600 h yeon) Boore value on year and 31.12.16 at s company [ 118,00 118100 7 E you. 88575

Unrealised profit - BN at year end at Scompany - Big at year and at prompany (it not Hansfer) = 88,535 - 62,700 2 25,875 of in consolidated al culation Net inwone connolling Interest year and Dee 31.2016 less Adal Prompany ret mome giren) 293000 unrealised profit on equipment p oate cele maicing Note 2) (25,895) (25,875) confolling interest share of couspany 89982 (working note t) of $ 357.107