Question
In: Accounting
Angela, Inc., holds a 90 percent interest in Corby Company. During 2017, Corby sold inventory costing...
Angela, Inc., holds a 90 percent interest in Corby Company. During 2017, Corby sold inventory costing $111,200 to Angela for $139,000. Of this inventory, $52,600 worth was not sold to outsiders until 2018. During 2018, Corby sold inventory costing $123,900 to Angela for $177,000. A total of $69,400 of this inventory was not sold to outsiders until 2019. In 2018, Angela reported separate net income of $237,000 while Corby's net income was $130,500 after excess amortizations.
What is the noncontrolling interest in the 2018 income of the subsidiary?
Multiple Choice
-
$174,500.
-
$173,300.
-
$214,200.
-
$183,200.
Solutions
Expert Solution
ANSWER=
(A) Computation of Unrealized Gross Profit:-
| Particular | Amount |
| Ending inventory on 2017 | $52600 |
|
Gross Profit rate $139000 - $111200 / $139000 x 100 |
20% |
| Unrealized Gross Profit on - 31 Dec -2017=($52600 x 20%) | $10520 |
| Ending inventory on 2018 | $69400 |
|
Gross Profit rate $177000 - $123900 / $177000 x 100 |
30% |
| Unrealized Gross profit - 31 Dec-2018 =($69400 x 30%) | $20820 |
(B) Computation of Non-controlling interest in 2018 income of Subsidiary as follows:-
Reported Net income for 2018 (Given) = $130500
Add:- Realized Gross profit deferred in 2017 = $10520
Less:- Deferral of Unrealized gross profit of 2018 = $20820
Realized Net income of Subsidiary = $120200
Therefore:-
Non-Controlling interest i.e. Outside ownership = 10%(100% -90% i.e. Angela & inc stake)
= $120200 x 10%
=$12020 (Final Answer)
Remark:-
According to given options in aforementioned question there is no way to match final answer to these options, because total income of Subsidiary Corby after all adjustment is $120200 which is 100% and NCI's Part is only 10% out of them which is $120200 x 10% = $12020, which is the requirement of the question.
ekkarill92 answered 2 years agoRelated Solutions
Angela, Inc., holds a 90 percent interest in Corby Company. During 2017, Corby sold inventory costing...
Angela, Inc., holds a 90 percent interest in Corby Company.
During 2017, Corby sold inventory costing $114,750 to Angela for
$153,000. Of this inventory, $44,000 worth was not sold to
outsiders until 2018. During 2018, Corby sold inventory costing
$127,400 to Angela for $196,000. A total of $60,600 of this
inventory was not sold to outsiders until 2019. In 2018, Angela
reported separate net income of $170,000 while Corby's net income
was $96,500 after excess amortizations. What is the noncontrolling...
Angela, Inc., holds a 90 percent interest in Corby Company. During 2020, Corby sold inventory costing...
Angela, Inc., holds a 90 percent interest in Corby Company.
During 2020, Corby sold inventory costing $99,900 to Angela for
$111,000. Of this inventory, $56,600 worth was not sold to
outsiders until 2021. During 2021, Corby sold inventory costing
$96,800 to Angela for $121,000. A total of $51,500 of this
inventory was not sold to outsiders until 2022. In 2021, Angela
reported separate net income of $219,000 while Corby's net income
was $114,500 after excess amortizations. What is the noncontrolling...
Playoff Corporation holds 90 percent ownership of Series Company. On July 1, 20X3, Playoff sold equipment...
Playoff Corporation holds 90 percent ownership of Series
Company. On July 1, 20X3, Playoff sold equipment that it had
purchased for $57,000 on January 1, 20X1, to Series for $53,000.
The equipment’s original six-year estimated total economic life
remains unchanged. Both companies use straight-line depreciation.
The equipment’s residual value is considered negligible.
Required:
a. Prepare the consolidation entry or entries in the consolidation
worksheet prepared as of December 31, 20X3, to remove the effects
of the intercompany sale. (If no...
Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago. During 2017, Skybox...
Parkette, Inc., acquired a 60 percent interest in Skybox Company
several years ago. During 2017, Skybox sold inventory costing
$188,000 to Parkette for $235,000. A total of 13 percent of this
inventory was not sold to outsiders until 2018. During 2018, Skybox
sold inventory costing $225,320 to Parkette for $262,000. A total
of 30 percent of this inventory was not sold to outsiders until
2019. In 2018, Parkette reported cost of goods sold of $577,500
while Skybox reported $365,000. What...
During 2018, Serenity Corp., a 90%-owned subsidiary, sold inventory to Patience, Inc. (its parent) for $800,000;...
During 2018, Serenity Corp., a 90%-owned subsidiary, sold
inventory to Patience, Inc. (its parent) for $800,000; the
inventory originally had cost Serenity $500,000. By the end of
2018, only one-fourth of the inventory had been resold to unrelated
parties. For 2018, the two companies reported the following:
Operating income of Patience
(excluding $900,000
earnings from
Serenity)
Net income of
Serenity
$500,000
Total
$1,400,000
Think through, and maybe write out, for yourself, the
elimination JE needed. Then...
On January 1, 2017, Harrison, Inc., acquired 90 percent of Starr Company in exchange for $1,125,000...
On January 1, 2017, Harrison, Inc., acquired 90 percent of Starr
Company in exchange for $1,125,000 fair-value consideration. The
total fair value of Starr Company was assessed at $1,200,000.
Harrison computed annual excess fair-value amortization of $8,000
based on the difference between Starr’s total fair value and its
underlying book value. The subsidiary reported net income of
$70,000 in 2017 and $90,000 in 2018 with dividend declarations of
$30,000 each year. Apart from its investment in Starr, Harrison had
net...
Bolero Company holds 70 percent of the common stock of Rivera, Inc., and 30 percent of...
Bolero Company holds 70 percent of the common stock of Rivera,
Inc., and 30 percent of this subsidiary’s convertible bonds. The
following consolidated financial statements are for 2017 and
2018:
2017
2018
Revenues
$
(965,000
)
$
(1,095,000
)
Cost of goods sold
623,000
663,000
Depreciation and amortization
113,000
146,000
Gain on sale of building
0
(43,000
)
Interest expense
53,000
53,000
Consolidated net income
(176,000
)
(276,000
)
to noncontrolling interest
32,000
34,000
to parent company
$
(144,000
)...
Bolero Company holds 75 percent of the common stock of Rivera, Inc., and 40 percent of...
Bolero Company holds 75 percent of the common stock of Rivera,
Inc., and 40 percent of this subsidiary’s convertible bonds. The
following consolidated financial statements are for 2017 and
2018:
2017
2018
Revenues
$
(945,000
)
$
(1,075,000
)
Cost of goods sold
619,000
659,000
Depreciation and
amortization
109,000
138,000
Gain on sale of building
0
(39,000
)
Interest expense
49,000
49,000
Consolidated net income
(168,000
)
(268,000
)
to noncontrolling interest
28,000
30,000
to parent company
$
(140,000
)...
Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 30 percent of...
Bolero Company holds 80 percent of the common stock of Rivera,
Inc., and 30 percent of this subsidiary’s convertible bonds. The
following consolidated financial statements are for 2017 and
2018:
2017
2018
Revenues
$
(875,000
)
$
(1,005,000
)
Cost of goods sold
605,000
645,000
Depreciation and
amortization
95,000
110,000
Gain on sale of building
0
(25,000
)
Interest expense
35,000
35,000
Consolidated net income
(140,000
)
(240,000
)
to noncontrolling interest
14,000
16,000
to parent company
$
(126,000
)...
Bolero Company holds 75 percent of the common stock of Rivera, Inc., and 40 percent of...
Bolero Company holds 75 percent of the common stock of Rivera,
Inc., and 40 percent of this subsidiary’s convertible bonds. The
following consolidated financial statements are for 2020 and 2021
(credit balances indicated by parentheses):
Bolero Company and Consolidated Subsidiary Rivera
2020
2021
Revenues
$
(945,000
)
$
(1,075,000
)
Cost of goods
sold
619,000
659,000
Depreciation and
amortization
109,000
138,000
Gain on sale of
building
0
(39,000
)
Interest
expense
49,000
49,000
Consolidated net
income
(168,000
)
(268,000
)...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Explain how biology, culture, and their interaction shape sex differences.
- Write a program that computes the tax and tip on a restaurant bill for a patron...
- clear all close all % %*******Parameter Settings******** %********************************* Fs=8192; %Sampling frequency (MATLAB's default) Ts=1/Fs; %Sampling time...
- Name a business that you believe has experienced declining costs attributable to computerization. Were variable costs...
- With C++, 1. Assume we use two linked lists that represent Set A and Set B...
- A beam of light shines on an equilateral glass prism at an angle of 45∘ to...
- This is an intro to python question. #Write a function called search_for_string() that takes two #parameters,...
ADVERTISEMENT