Reference no: EM132447247
ACC 630 Financial Reporting Assignment - Southern New Hampshire University, USA
Question - On January 1, 2016, Leo Company purchased 80 percent of Natalie Company's capital stock for $584,000 in cash and other assets. Natalie had a book value of $700,000 and the 20 percent non-controlling interest fair value was $146,000 on that date. On January 1, 2015, Natalie had acquired 30 percent of Leo for $354,250. Leo's appropriately adjusted book value as of that date was $1,147,500.
Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $25,000 in dividends to shareholders each year and Natalie distributes $6,000 annually. Any excess fair-value allocations are amortized over a 10-year period.
|
Year
|
Leo Company
|
Natalie Company
|
|
2016
|
$164,000
|
$35,200
|
|
2017
|
$186,000
|
$56,000
|
|
2018
|
$216,000
|
$64,400
|
Required -
1. If Leo uses the equity method for investment, what is the subsidiary's income recognized by Leo in 2018?
2. What is the net income attributable to the non-controlling interest for 2018?