Problem 7-16 (LO 7-1) Boulder, Inc, obtained 90 percent of Rock Corporation on J

Question

Problem 7-16 (LO 7-1) Boulder, Inc, obtained 90 percent of Rock Corporation on January 1, 2016. Annual amortization of $22,600 is applicable on the allocations of Rock's acquisition-date business fair value. On January 1, 2017, Rock acquired 75 percent of Stone Company's voting stock. Excess business fair-value amortization on this second acquisition amounted to $9,000 per year. For 2018, each of the three companles reported the following information accumulated by its separate accounting system. Separate operating income figures do not include any investment or dividend income Boulder Rock Stone $275,500 95,500 160,000 118,000 27,000 39,000 a. What is consolidated net income for 2018? b. How is 2018 consolidated net income distributed to the controlling and noncontrolling interests? a. Consolidated net income b. Controlling interest in consolidated net income Noncontrolling interest in consolidated net income Reference links

Explanation / Answer

boulder’s operating income 275500

rock’s operating income 95500

stone’s operating income 160000

amortizaiton expense – boulder’s investment in rock 22600

amortization expense – rock’s investment in stone 9000

consolidated net income = 562600

boulder’s operating income   275500

boulder’s share in rock’s operating income (90%*95500) 85950

boulder’ share in stone’s operating income (90%*75%*160000) 108000

boulder’s share in rock’s excess amortization (90%*22600) 20340

boulder’ share in stone’s excess amortization (90%*75%*9000) 6075

controlling interest in consolidated net income = 495865

consolidated net income 562600

Less: controlling interest in consolidated net income 495865

Non- controlling interest in consolidated net income = 66735

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