Question

Western Tractor corporation increases its ownership interest in Segundo Corporation, from 70% on January 1, 2019...

Western Tractor corporation increases its ownership interest in Segundo Corporation, from 70% on January 1, 2019 to 90% at July 1, 2019. Segundo’s income is assumed to be earned evenly throughout the year. Segundo’s net income for 2019 is $200,000. No dividends were declared in 2019

Required: Calculate the amount of Segundo’s net income that will be allocated to the controlling and non-controlling interest for the year 2019.

Note: The following template is included as a guide to assist you in formulating your answer

Allocation of Sub’s net income:

Controlling share of Segundo's 2011 income:

Calculations

Amount

Before Acquisition (1/2 year) - 70% ownership

After Acquisition (1/2 year) - 90% ownership

Non-Controlling share of Segundo's 2011 income:

Calculations

Amount

Before Acquisition (1/2 year) - 30% ownership

After Acquisition (1/2 year) - 10% ownership
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Total profit of subsidiary = $200,000

Profit for 1st half year = $100,000

Profit for 2nd half year = $100,000

Controlling Share of Segundo's 2019 income

Before acquisition = 100,000 x 70% = 70,000

After acquisition = 100,000 x 90% = 90,000

Total Profit for Controlling interest = 160,000

Non Controlling Share of Segundo's 2019 income

Before acquisition = 100,000 x 30% = 30,000

After acquisition = 100,000 x 10% = 10,000

Total Profit for Non controlling interest = 40,000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2018, Byner Company purchased a used tractor. Byner paid $8,000 down and signed...
On January 1, 2018, Byner Company purchased a used tractor. Byner paid $8,000 down and signed a noninterest-bearing note requiring $34,000 to be paid on December 31, 2020. The fair value of the tractor is not determinable. An interest rate of 12% properly reflects the time value of money for this type of loan agreement. The company’s fiscal year-end is December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of...
Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2019....
Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2019. During 2019, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of fair value allocations totaled $60,000 in 2019. Not including its investment in Harbor, Femur Co. had its own revenues of $4,500,000 and expenses of $3,000,000 for the year 2019. A.) What amount of consolidated net income for 2019 should be allocated to Femur’s controlling interest in Harbor? B.) What amount...
Package Corporation acquired 90 percent ownership of Sack Grain Company on January 1, 20X4, for $117,900...
Package Corporation acquired 90 percent ownership of Sack Grain Company on January 1, 20X4, for $117,900 when the fair value of Sack’s net assets was $12,000 higher than its $119,000 book value. The increase in value was attributed to amortizable assets with a remaining life of 10 years. At that date, the fair value of the noncontrolling interest was equal to $13,100. During 20X4, Sack sold land to Package at a $6,500 profit. Sack Grain reported net income of $22,000...
Morey Corporation leases a tractor from Equity Leasing with a five-year non-cancelable lease on January 1,...
Morey Corporation leases a tractor from Equity Leasing with a five-year non-cancelable lease on January 1, 20X1 under the following terms: 1. Five payments of $26,379.74 (a 9% implicit rate, known to Morey) due at the end each year. 2. The payments were calculated based on the fair value (which is also the book value for Equity) of the tractor. 3. The lease is nonrenewable and the tractor reverts to Equity at the end of the lease term. 4. The...
On January 1, 2018, Byner Company purchased a used tractor. Byner paid $3,000 down and signed...
On January 1, 2018, Byner Company purchased a used tractor. Byner paid $3,000 down and signed a noninterest-bearing note requiring $44,000 to be paid on December 31, 2020. The fair value of the tractor is not determinable. An interest rate of 11% properly reflects the time value of money for this type of loan agreement. The company’s fiscal year-end is December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of...
On January 1, 2019, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2019, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc., for $612,000 cash. The acquisition-date fair value of the noncontrolling interest was $68,000. At January 1, 2019, Star’s net assets had a total carrying amount of $476,000. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $71,200. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
On January 1, 2018, Jamison Company purchased 70% of the common stock of Kelly Corporation for...
On January 1, 2018, Jamison Company purchased 70% of the common stock of Kelly Corporation for $455,000. The non-controlling interest was valued at $195,000. The stockholders’ equity of both companies is as follows: Jamison Co. Kelly Co. Common Stock 300,000 200,000 Retained Earnings 400,000 450,000 The income and dividend information for both companies for 2018 is listed below. Jamison Co. Kelly Co. Net Income 145,000 70,000 Dividends 50,000 40,000 Directions: Prepare any necessary consolidation entries for 2018.
On January 1, 2018, Jamison Company purchased 70% of the common stock of Kelly Corporation for...
On January 1, 2018, Jamison Company purchased 70% of the common stock of Kelly Corporation for $455,000. The non-controlling interest was valued at $195,000. The stockholders’ equity of both companies is as follows: Jamison Co. Kelly Co. Common Stock 300,000 200,000 Retained Earnings 400,000 450,000 The income and dividend information for both companies for 2018 is listed below. Jamison Co. Kelly Co. Net Income 145,000 70,000 Dividends 50,000 40,000 Directions: Prepare any necessary consolidation entries for 2018.
Pilfer Company acquired 90 percent ownership of Scrooge Corporation in 20X7, at underlying book value. On...
Pilfer Company acquired 90 percent ownership of Scrooge Corporation in 20X7, at underlying book value. On that date, the fair value of noncontrolling interest was equal to 10 percent of the book value of Scrooge Corporation. Pilfer purchased inventory from Scrooge for $90,000 on August 20, 20X8, and resold 70 percent of the inventory to unaffiliated companies on December 1, 20X8, for $100,000. Scrooge produced the inventory sold to Pilfer for $67,000. The companies had no other transactions during 20X8....
Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2019,...
Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2019, Thomson acquired a building with a 10-year life for $444,000. Thomson depreciated the building on the straight-line basis assuming no salvage value. On January 1, 2021, Thomson sold this building to Stayer for $394,400. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2021, how does this transfer affect the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT