In: Accounting
Boulder, Inc., obtained 90 percent of Rock Corporation on January 1, 2016. Annual amortization of $25,900 is applicable on the allocations of Rock's acquisition-date business fair value. On January 1, 2017, Rock acquired 75 percent of Stone Company's voting stock. Excess business fair-value amortization on this second acquisition amounted to $12,800 per year. For 2018, each of the three companies reported the following information accumulated by its separate accounting system. Separate operating income figures do not include any investment or dividend income.
Separate Operating Income | Dividends Declared | |||
Boulder | $391,400 | $135,000 | ||
Rock | 135,400 | 21,000 | ||
Stone | 198,000 | 42,000 | ||
What is consolidated net income for 2018?
How is 2018 consolidated net income distributed to the controlling and noncontrolling interests?
Computation of consolidated net income for 2018: -
Particulars | Amount (in $) |
Operating Income - Boulder | 3,91,400 |
Operating Income - Rock | 1,35,400 |
Operating Income - Stone | 1,98,000 |
Less : Amortization Expense - Boulder investment in Rock | (25,900) |
Less : Amortization Expense - Rock investment in Stone | (12,800) |
Consolidated Net Income | 6,86,100 |
Distribution of Consolidated net income for 2018 in to controlling interest and NCI: -
Particulars | Amount (in $) |
Operating Income - Stone | 1,98,000 |
Less : Amortization Expense - Rock investment in Stone | (12,800) |
Investment | 1,85,200 |
Outside Ownership = 25%
NCI in Stone Investment = $46,300 [1,85,200 x 25%] - [A]
Particulars | Amount (in $) |
Operating Income - Rock | 1,35,400 |
Less : Amortization Expense - Boulder investment in Rock | (25,900) |
Equity accrual from ownership of stone [ 1,85,200 x 75%] | 1,38,900 |
Investment | 2,48,400 |
Outside Ownership = 10%
NCI in Stone Investment = $24,840 [2,48,400 x 10%] - [B]
Total Net Income attributed to NCI [A+B] = 71,140
Total Net Income attributed to Controling Interest = [6,86,100 - 71,140 ]= 6,14,960
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