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Determine the Preliminary Computation

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Question - Pongo Company has $2,000,000 of 6% bonds outstanding on December 31, 2013 with unamortized premium of $60,000. These bonds pay interest semiannually on January 1 and July 1 and mature on January 1, 2019. Straight-line amortization is used.

Syring Inc., 90%-owned subsidiary of Pongo, buys $1,000,000 par value of Pongo's outstanding bonds in the market for $980,000 on January 2, 2014. There is only one issue of outstanding bonds of the affiliated companies and they have consolidated financial statements.

For the year 2014, Pongo has income from its separate operations (excluding investment income) of $3,000,000 and Syring reports net income of $200,000. Pongo uses the equity method to account for the investment.

Required -

1. Determine the Preliminary Computation?

2. Determine the Noncontrolling interest share for 2014?

3. Determine the Controlling share of consolidated net income for Pongo Company and subsidiary for 2014?

Reference no: EM132948051

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