Exercise 5-5 On January 1, 2014, P Company purchased an 80% interest in S Compan
ID: 2563332 • Letter: E
Question
Exercise 5-5 On January 1, 2014, P Company purchased an 80% interest in S Company for $617,600, at which time S Company had retained earnings of $309,000 and common stock of $334,000. Any difference between book value and the value implied by the purchase price was entirely attributable to a patent with a remaining useful life of 10 years. Assume that P and S Companies reported net incomes from their independent operations of $200,700 and $95,600, respectively. Calculate the controlling interest and noncontrolling interest in consolidated net income for the year ended December 31, 2014. Controlling Interest in Consolidated Net Income Noncontrolling Interest in Consolidated Net Income $Explanation / Answer
Parent Non controlling share Entire Value Purchase Price 617600 154400 772000 (617800/.8) Less: book value of equity 514400 128600 643000 (643000*.8) Difference attributable to patent 103200 25800 129000 ans Controlling interest in Consolidated Net Income ((200700+95600)-(103200/10))*80% 228784 Non Controlling interest in Consolidated Net Income ((200700+95600)-(103200/10))*20% 57196 If any doubt please comemnt