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Assume that on January 1, 2012, a parent company acquired a 80% interest in a subsidiary’s...

Assume that on January 1, 2012, a parent company acquired a 80% interest in a subsidiary’s voting common stock. On the date of acquisition, the fair value of the subsidiary’s net assets equaled their reported book values. On January 1, 2014, the subsidiary purchased a building for $336,000. The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2016, the subsidiary sold the building to the parent for $294,000. The parent estimated that the building had a six year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2016, the parent’s “stand-alone” income (i.e., net income before recording any adjustments related to pre-consolidation investment accounting) is $350,000. The subsidiary’s recorded net income is $70,000.

1)Based on this information, determine the balance for income from investment in subsidiary (on parent’s pre-consolidations books preceding consolidation):

A $21,000

B $28,000

C $56,000

D $63,000

2)Based on this information, determine the balance for consolidated building (net of accumulated depreciation):

A $210,000

B $245,000

C $294,000

D $336,000

3)Based on this information, determine the balance for consolidated depreciation expense:

A $25,200

B $29,400

C $42,000

D $49,000

4)Based on this information, determine the balance for consolidated net income attributable to the controlling interest:

A $371,000

B $378,000

C $406,000

D $413,000

5)Based on this information, determine the balance for consolidated income attributable to noncontrolling interest:

A $15,400

B $14,000

C $7,000

D $5,600

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Expert Solution

ekkarill92 answered 1 year ago
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