Reference no: EM132937942

On January 1, Year 3, First Rate Corp (First) purchased 1,350 common shares of Second Opinion Ltd (Second) for $112,500. On this date, the shareholders' equity accounts of Second were as follows:

Common (ordinary) shares (1,685 shares issued and outstanding) = $35000
Preferred shares (5,500 shares issued and outstanding) = $71500
Retained earnings = $80000

The preferred shares have a $1/share dividend rate and are cumulative and non-participating with a liquidation value of $13.80 per share. The dividends were one year in arrears on January 1, Year 3.

The following information pertains to retained earnings for the two companies for Year 3:

                                                                           First                Second
Retained earnings, beginning of the year   $146000             $80000
Net income                                           58000                 36000
Dividends declared and paid                      20000                18000
Retained earnings, end of the year           184000                98000

Additional information:

• First uses the cost method to account for its investment in Second
• Any acquisition differential related to patents with an estimated useful life of 5 years as of January 1, Year 3. Neither company has any patents recorded on their separate entity records.

Required:

Problem A. Calculate non-controlling interest for the consolidated income statement for Year 3.

Problem B. Calculate the non-controlling interest for the consolidated statement of financial position (balance sheet) at the end of Year 3.