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Highpoint owns a 95 percent majority voting interest in Middlebury. In turn, Middlebury owns an 80...

Highpoint owns a 95 percent majority voting interest in Middlebury. In turn, Middlebury owns an 80 percent majority voting interest in Lowton. In the current year, each firm reports the following income and dividends. Separate Company income figures do not include any investment or dividend income.

Separate Company Income   Dividends Declared

Highpoint      $425,000                    $200,000

Middlebury  340,000                 150,000 

Lowton          250,000              75,000

EXCEL - All calculations should be performed within the spreadsheet-you should enter only the numbers that are provided by the problem, and every other calculation should be done using an Excel formula.

In addition, in computing its income on a full accrual basis, Middlebury’s acquisition of Lowton necessitates excess acquisition-date fair value over book value amortizations of $25,000 per year. Similarly, Highpoint’s acquisition of Middlebury requires $20,000 of excess fair-value amortizations.

Required Prepare an Excel spreadsheet that computes the following:

1. Middlebury’s net income including its equity in Lowton earnings.

2. Highpoint’s net income including its equity in Middlebury’s total earnings.

3. Total entity net income for the three companies.

4. Net income attributable to the noncontrolling interests.

5. Difference between these elements: Highpoint’s net income. Total entity net income for the three companies less net income attributable to the noncontrolling interests of the total entity. (Hint: The difference between these two amounts should be zero.)

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Expert Solution

ekkarill92 answered 1 year ago
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