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On January 1, 2019, Jannison Inc. acquired 90% of Techron Co. by paying $477,000 cash. There...

On January 1, 2019, Jannison Inc. acquired 90% of Techron Co. by paying $477,000 cash. There is no active trading market for Techron stock. Techron Co. reported a Common Stock account balance of $140,000 and Retained Earnings of $280,000 at that date. The fair value of Techron Co. was appraised at $530,000. The total annual amortization was $11,000 as a result of this transaction. The subsidiary earned $98,000 in 2019 and $126,000 in 2020 with dividend payments of $42,000 each year. Without regard for this investment, Jannison had income of $308,000 in 2019 and $364,000 in 2020.

Using Excel

Prepare a proper presentation of consolidated net income and its allocation for 2019.

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Solution-

Consolidated Income statement presentation - 2019
Jannison’s income $308,000
Techron’s income           98,000
Amortization expense (given)         (11,000)
Consolidated net income $395,000
To non-controlling interest (10%) ($98,000-11,000)           (8,700)
To controlling interest         386,300
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