Grasper Corporation owns 60 percent of Latent Corporation’s common stock and 30
ID: 2523964 • Letter: G
Question
Grasper Corporation owns 60 percent of Latent Corporation’s common stock and 30 percent of Dally Corporation’s common stock. In addition, Latent owns 50 percent of Dally’s stock. In 20X6, Grasper, Latent, and Dally reported operating income of $95,000, $60,000, and $45,000 and paid dividends of $55,000, $25,000, and $25,000, respectively.
What amount of consolidated net income will Grasper report for 20X6?
What amount of income will be assigned to the noncontrolling interest in the 20X6 consolidated income statement?
What amount of income will be assigned to the controlling interest in the 20X6 income statement?
What amount will be reported as dividends declared in Grasper’s 20X6 consolidated retained earnings statement?
Grasper Corporation owns 60 percent of Latent Corporation’s common stock and 30 percent of Dally Corporation’s common stock. In addition, Latent owns 50 percent of Dally’s stock. In 20X6, Grasper, Latent, and Dally reported operating income of $95,000, $60,000, and $45,000 and paid dividends of $55,000, $25,000, and $25,000, respectively.
Explanation / Answer
Answer
a. Consolidated Net income reported by Grasper:
= 95000 + 60000 + 45000
= $200000
b. Income assigned to non controlling interest:
= [95000+60000+45000] - 156200
= $46000
c. Income of Dally owned by Latent = 45000*60% = $27000
Total Income of Latent = 60000 + 27000 = $87000
Income of Dally owned by grasper = 45000x20% = $9000
Income of Latent owned by Grasper =87000 x 60% = $52200
Net Income assigend to the controlling interest = 95000 + 52200 + 9000
= $156200
D.
Only the $45000 of dividend paid by grasper corp. to its shareholders, hence $45000 will be reported as dividend declared in retained earning statement.
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