Exercise 5-5 Your answer is incorrect. Try again On January 1, 2014, P Company p

Question

Exercise 5-5 Your answer is incorrect. Try again 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

1) Calculation of Controlling and Noncontrolling interest in Consolidated Net income :

Net income of S Company = $95,600

Controlling interest of P in S company's net income = $95,600 * 80%

= $76,480

Non Controlling interest in S Company's Net income = $95,600 * 20%

= $19,120

Consolidated Net income = $200,700 + $95,600

= $296,300

Non Controlling interest in Consolidated net income = $19,120

Controlling Interest In Consolidated net income = $296,300 - $19,120

= $277,180  

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