Question

In: Accounting

Akron, Inc. owns 80%  of the capital stock of Benson Company and 60%  of the capital stock of...

Akron, Inc. owns 80%  of the capital stock of Benson Company and 60%  of the capital stock of Cashin, Inc. Benson Company owns 35%  of the capital stock of Cashin, Inc. Cashin, Inc., in turn, owns 25% of the capital stock of Akron, Inc.

Net income before adjusting for interests in intercompany net income for each corporation follows:

Akron, Inc.

A(0) = 180,000

Benson Co.

B(0) = 130,000

Cashin, Inc.

C(0) = 320,000

Ignore all income tax considerations.

A(e) = Akron's consolidated net income; that is, its net income plus its share of the consolidated net income of Benson and Cashin

B(e) = Benson's consolidated net income; that is, its net income plus its share of the consolidated net income of Cashin

C(e) = Cashin's consolidated net income; that is, its net income plus its share of the consolidated net income of Akron

Suppose a parent company (or parent companies) owns less than 100%  but more than 50%  of a subsidiary company. Then, the part of the consolidated net income that doesn't belong to the parent companies is called the subsidiary's company minority interest.

Benson's minority interest in consolidated net income is:

A) 61,090

B) 45,500

C) 109,907

D) 26,000

Solutions

Expert Solution

Minority Interest Calculation of Benson Company :-
Solution :-
Name of the Company % Share Subsidary Company
Akron Inc 80% Benson Company
Akron Inc 60% Cashin Inc
Benson Company 35% Cashin Inc
Cashin Inc 25% Asron Inc
Minority Interest Defination :-
Minority Interest is the Ownership of the Subsidary Companies
Not by the Holding Company (i.e., Lessthan 50% of Shares)
Hence, in the above table Minorirty Interest will be calculated
for the Benson Company & Cashin Inc only, because of lessthan
50% of shares
Benson Company Net Income is Rs.1,30,000/-
Akron Inc having 80 % of Share of Benson Company, it means
Rs.1,30,000/- @ 80 % = Rs.1,04,000/-
Hence Rs.1,30,000/- Less Rs.1,04,000/- = Rs.26,000/-
Benson Company Minority Interest in the consolidate income
is Rs.26,000/-
Answer (D)

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Prout Company owns 80% of the common stock of Sexton Company. The stock was purchased for...
Prout Company owns 80% of the common stock of Sexton Company. The stock was purchased for $1,600,000 on January 1, 2017, when Sexton Company's retained earnings were $800,000. On January 1, 2019, Prout Company sold fixed assets to Sexton Company for $360,000. These assets were originally purchased by Prout Company for $400,000 on January 1, 2009, at which time their estimated depreciable life was 25 years. The straight‐line method of depreciation is used. On December 31, 2020, the trial balances...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2017, Hamilton sold $1,500,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 8...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.      On January 1, 2011, Hamilton sold $1,500,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 8...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2011, Hamilton sold $1,300,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 8...
William Smith, Sr., was the founder of Smith Enterprises, Inc. He owns 60% of the stock...
William Smith, Sr., was the founder of Smith Enterprises, Inc. He owns 60% of the stock of Smith Enterprises (60,000 shares of 100,000 shares outstanding, stock basis $100 per share). The value of the stock was recently determined to be about $500 per share. Over the years, William, Sr., has done a very good job of getting his sons and daughters (and even grandchildren) involved in the business, and the other 40% of the Smith Enterprises stock is owned by...
7) P Company owns 80% of the outstanding common stock of S Company. On January 1....
7) P Company owns 80% of the outstanding common stock of S Company. On January 1. 2018, S Company sold land to P Company for OMR 500,000. S Company originally purchased the land for OMR 300,000. On January 1, 2019, P Company Sold the land purchased from S Company to a company outside the affiliated group for OMR 600,000. A. Prepare the journal entry of intercompany sales. B. Prepare in general journal form the workpaper entries necessary because of the...
9) Padhy Corporation owns 80% of Abrams Corporation, Abrams Corporation owns 60% of Bacud Corporation, and...
9) Padhy Corporation owns 80% of Abrams Corporation, Abrams Corporation owns 60% of Bacud Corporation, and Bacud Corporation owns 10% of Abrams Corporation. The separate net incomes (excluding investment income) of Padhy, Abrams, and Bacud are $300,000, $100,000, and $80,000, respectively. Assume the investments were acquired at a cost equal to the book value of each investment, which also equals the fair value. Required: Calculate the controlling interest share of consolidated net income and the noncontrolling interest shares for Padhy...
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at...
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Spark Filter. Summarized trial balance data for the two companies as of December 31, 20X8, are as follows: Plug Products Spark Filter Company Debit Credit Debit Credit Cash and Accounts Receivable $ 158,000 $ 104,000 Inventory 221,000...
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at...
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Spark Filter. Summarized trial balance data for the two companies as of December 31, 20X8, are as follows: Plug Products Spark Filter Company Debit Credit Debit Credit Cash and Accounts Receivable $ 164,000 $ 91,000 Inventory 227,000...
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at...
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Spark Filter. Summarized trial balance data for the two companies as of December 31, 20X8, are as follows: Plug Products Spark Filter Company Debit Credit Debit Credit Cash and Accounts Receivable $ 151,000 $ 94,000 Inventory 231,000...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT