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Arnold Corporation holds 70 percent of Belvista, which, in turn, owns 70 percent of Stang. Separate...

Arnold Corporation holds 70 percent of Belvista, which, in turn, owns 70 percent of Stang. Separate operating income figures (excluding investment income) and intra-entity upstream gains (on assets remaining within the consolidated group) included in the income for the current year follow:

Arnold Belvista Stang

Separate operating income $625,000 $305,000 $240,000

Intra-entity gains –0– 18,000 50,000

What is the amount of consolidated net income attributable to the noncontrolling interests?

$143,100

$163,500

$183,000

$213,900

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Answer #1

Since Arnold Corporation holds 70% of Belvista and Stang. Hence the controlling interest of Arnold Corporation is 70% and Non-Controlling interest is 30%.

Operating Incomes

Arnold

Belvista

Stang

$625,000

$305,000

$240,000

     Income to Non-Controlling interest

Belvista = 30% * 305,000 = $ 91,500

Stang = 30% * 240,000 = $ 72,000

Intra-entity gain in Non-Controlling interest = $ 18,000 + $ 50,000 = $ 68,000 * 30% = $ 20,400

Total Net Income attributable to Non Controlling interests is $ 163,500 ($ 91,500 + $ 72,000) - $ 20,400 = $ 143,100.

The complete elimination of Intra-entity gain is consistent with the underlying assumption that the consolidated financial statements represent the financial position and operating results of a single economic entity.

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