Petime Corporation acquired 90 percent ownership of United Grain Company on Janu
ID: 2452902 • Letter: P
Question
Petime Corporation acquired 90 percent ownership of United Grain Company on January 1, 20X4, for $106,000 when the fair value of United’s net assets was $15,000 higher than its $117,000 book value. The increase in value was attributed to amortizable assets with a remaining life of 10 years. At that date, the fair value of the noncontrolling interest was equal to $26,000.
During 20X4, United sold land to Petime at a $6,500 profit. United Grain reported net income of $23,000 and paid dividends of $4,500 in 20X4. Petime reported income, exclusive of its income from United Grain, of $34,000 and paid dividends of $14,400 in 20X4.
Compute the amount of income assigned to the controlling interest in the consolidated income statement for 20X4.
Controlling Interest:
By what amount will the 20X4 income assigned to the controlling interest increase or decrease if the sale of land had been from Petime to United Grain, the gain on the sale of land had been included in Petime’s $34,000 income, and the $23,000 was income from operations of United Grain?
Reported income will;
By:
Petime Corporation acquired 90 percent ownership of United Grain Company on January 1, 20X4, for $106,000 when the fair value of United’s net assets was $15,000 higher than its $117,000 book value. The increase in value was attributed to amortizable assets with a remaining life of 10 years. At that date, the fair value of the noncontrolling interest was equal to $26,000.
Explanation / Answer
(a) amount of income assigned to the controlling interest in the consolidated income statement for 20X4
(b)
2014 income assigned to the controlling interest will decrease by $650 if the sale of land had been from Petime to United Grain,
Net Income of United Grain 23000 Less: Unrealized Profit in Sale of Land -6500 Realized Income of 2014 16500 Amortization of Increase in Net Assets 15000/10 -1500 Attributable Income of United Grain 15000 Income attributable to controlling Interest: 15000*90% 13500 Net Income of Petime 34000 Income attributable to controlling Interest 13500 Consolidated Net Income 47500Related Questions
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