On July 1, 2016, S&S Inc. acquired 80% of Wade Co. by paying $596,000 cash. Wade...

On July 1, 2016, S&S Inc. acquired 80% of Wade Co. by paying $596,000 cash. Wade Co. reported a Common Stock account balance of $160,000 and Retained Earnings of $360,000 at that date. S&S Inc.’s purchase was the best basis for determining the fair value of Wade Co. The total annual amortization as a result of this transaction was determined to be $12,000. Wade Co. realized net income of $104,000 evenly for the year in 2016 and made an annual dividend payment of $48,000 on October 1, 2016.

What is the non controlling interest share of Wade Co. net income for 2016? Show all work and computations in support of your answer.

Compute the noncontrolling interest in Wade Co. at December 31, 2016. SHOW ALL WORK IN SUPPORT OF YOUR ANSWER.

Using the information above, what is the book value of Wade Co. at the acquisition date?

Solutions

Expert Solution

W/No:-1 Computation of Book Value At Acquisition
Common Stock & Retained Earning Balance ($160000+$360000)		$520,000.00

Non Controlling Interest (20%*520000		$104,000.00
S& S Inc. r Co. (80%*520000)		$416,000.00

W/No:-2 Allocation of Differential in Fair Value & Book Value
Investment shown as per Power Co.		$596,000.00
Book Value of Investment		$416,000.00
Difference on a/c of S&S Inc.		$180,000.00
Difference On a/c of NCI ($180000/80%)*20%		$45,000.00

Computaion of Non Controlling Interest in Wade co. as on 31 Dec 2016
Share in book Value W/No.-1		$104,000.00
Share in Increase in Fair Value W/No-2		$45,000.00
Total Nci as on 31 Dec 2016		$149,000.00

Computation of Non Controlling interest Share in Net Income
Total Net Income		$104,000.00
Share of NCI		20%
Allocated share of Income for NCI		$20,800.00
Dividend paid toNCI ($48000*20%)		$9,600.00
Net Income share in Wade co.		$11,200.00

ekkarill92 answered 1 year ago

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