Royce Co. acquired 60% of Park Co. for $420,000 on December 31, 2010 when Park\'
ID: 2570779 • Letter: R
Question
Royce Co. acquired 60% of Park Co. for $420,000 on December 31, 2010 when Park's book value was S560,000. The Royce stock was not actively traded. On the date of acquisition, Park had equipment (with a ten year life) that was undervalued in the financial records by $140,000. One year later, the following selected figures w ere reported by the two companies. Additionally, no dividends have been paid. Rovce Co. Park Co. Book Value Book Value air Value Current assets Equipment Buildings Liabilities Revenues Expenses Investment income 868,000 S 420,000 S 448,000 364,000 280,000 400,000 574,000 210,000 210,000 546,000) (168,000) (168,000) 420,000 (1,260,000) (560,000) 700,000 Not Given 27. What is consolidated net income for 2011 attributable to Royce's controlling interest? 28. What is the noncontrolling interest's share of the subsidiary's net income for the year ended December 31, 2011 and what is the ending balance of the noncontrolling interest in the subsidiary at December 31,2011Explanation / Answer
Particulars Royce Co Park Co Total Revenue 1,260,000.00 560,000.00 1,820,000.00 Expense -700,000.00 -420,000.00 -1,120,000.00 560,000.00 140,000.00 700,000.00 Less: Amortisation of equipment[140000/10] -14000 -14000 Consolidated revenue 560,000.00 126,000.00 686,000.00 27 Share of Royce CO in Net income 560,000.00 75,600.00 635,600.00 28 Non controlling interest share of Net income 50,400.00 50,400.00 Total revenue 560,000.00 126,000.00 686,000.00 Non controlling interest on the date of acquition: Royce acquisition cost 420,000 Fair value of Park co 420000/60% 700,000 Non controlling interest fair value 700000*40% 280,000 Add: Share of NCI in NI of park 50,400 Non controlling interest balance 330,400
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