Homework Answers
Preliminary Computations:
Investment Cost $580,000
Book Value acquired ($600,000*80%) $480,000
Total excess cost over book value acquired $100,000
Excess allocated to:
Equipment (5 year life) ($50,000*80%) $40,000
Patents(10 year amortization period) $60,000
Total excess cost over book value acquired $100,000
Income from Son 2016 2017
80% of Son's reported income $96,000 $120,000
Less:Depreciation of excess allocated to equipment ($8,000) ($8,000)
Less: Amortization of patents ($6,000) ($6,000)
Income from Son $82,000 $106,000
1) Consolidated net income for 2016
Pop's net income = consolidated net income under equity Method = $340,000
2) investment in Son December 31, 2016
Cost January 1, 2016 $580,000
Add: Income from Son - 2016 82,000
Less: Dividends from Son- 2016 ($80,000*80%) (64,000)
Investment in Son December 31,2016 $598,000
3) Non controlling interest share- 2016 ($120,000*20%) $24,000
4) Non controlling interest December 31, 2017
Son's equity December 31, 2017 $600,000
Add:Income less dividends for 2016 and 2017 100,000
Son's equity December 31,2017 $700,000
Noncontrolling Interest Percentage 20%
Noncontrolling interest December 31,2017 $140,000
Add Answer to:
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