Question

X Company acquired an 80% stake in y Company on January 1, 2018, when the book...

X Company acquired an 80% stake in y Company on January 1, 2018, when the book value of y Company’s stockholder equity accounts was $400,000. All of the $250,000 excess fair value over book value was allocated to goodwill. There were no intra-entity transactions during the year, and y Company reported net income on its books for $160,000 for 2018. y Company also declared dividends of $40,000 in 2018. What is the noncontrolling interest ending balance in the December 31, 2018 consolidated balance sheet?

Homework Answers

Answer #1
Computation of non controlling interest
Fair value at the time of acquisition
i book value of y Company’s stockholder equity accounts $      400,000
ii goodwill on acquisition $      250,000
iii=i+ii Total $      650,000
iv=iii*20% Share of minority 20% $      130,000
Share in profit
v y Company reported net income $      160,000
vi Less Dividend declared $       (40,000)
vii=v+vi Total $      120,000
viii =vii*20% Share of minority 20% $         24,000
ix=viii+iv Net noncontrolling interest ending balance $      154,000
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