Question

Pie Corporation acquired 70 percent of Slice Company’s common stock on December 31, 20X5, at underlying book value. The book values and fair values of Slice’s assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 30 percent of the total book value of Slice. Slice provided the following trial balance data at December 31, 20X5:

	Debit			Credit
Cash	$	27,100
Accounts Receivable		64,900
Inventory		89,200
Buildings and Equipment (net)		208,000
Cost of Goods Sold		104,800
Depreciation Expense		24,350
Other Operating Expenses		30,820
Dividends Declared		14,700
Accounts Payable				$	32,960
Notes Payable					122,000
Common Stock					88,200
Retained Earnings					127,000
Sales					193,710
Total	$	563,870		$	563,870

Required:
a. How much did Pie pay to purchase its shares of Slice? (Round your answer to nearest whole dollar amount.)
  

b. If consolidated financial statements are prepared at December 31, 20X5, what amount will be assigned to the noncontrolling interest in the consolidated balance sheet? (Round your answer to nearest whole dollar amount.)
  

c. If Pie reported income of $140,750 from its separate operations for 20X5, what amount of consolidated net income will be reported for 20X5?
  

d. If Pie had purchased its ownership of Slice on January 1, 20X5, at underlying book value and Pie reported income of $140,750 from its separate operations for 20X5, what amount of consolidated net income would be reported for 20X5?
  

Answer 1

A)
Book Value of Stock
Cash	27100
Accounts Receivable	64900
Inventory	89200
Buildings and Equipment (net)	208000
Less:
Accounts Payable	32960
Notes Payable	122000
	234240
Quoton should pay	$      163968.00
(70% of 234240)
B)
Non Controlling Interest	$        70272.00
C)
Consolidated Income of Quoton
Separate Income of Quoton	140750
Income from Tempro	0
Total Income	140750
Since controlling interest acquired on 31 dec 2015.
D)
Consolidated Income of Quoton
Separate Income of Quoton	144500
Income from Tempro	23618
Total Income	168118
Income of Tempro
Sales	193710
Less: Cost of Goods Sold	104800
Depreciation Exp	24350
Operating Exp	30820
	33740
Share in Tempro Income@70%	23618