Sir Corporation is a 90 percent-owned subsidiary of Pit Corporation, acquired several years ago at book value equal to fair value. For 2011 and 2012, Pit and Sir report the following:
2011 2012
Pit's separate income (excludes income from Sir) .................. $150,000 ........ $200,000
Sir's Net Income ............................................................ 40,000 ........... 30,000
The only intercompany transaction between Pit and Sir during 2011 and 2012 was the January 1, 2011, sale of land. The land had a book value of $10,000 and was sold intercompany for $15,000, its appraised value at the time of sale.
1. Assume that the land was sold by Pit to Sir and that Sir still owns the land at December 31, 2012.
a. Calculate controlling share of consolidated net income for 2011 and 2012.
b. Calculate noncontrolling interest share for 2011 and 2012.
2. Assume that the land was sold by Sir to Pit and Pit still holds the land at December 31, 2012.
a. Calculate controlling share of consolidated net income for 2011 and 2012.
b. Calculate noncontrolling interest share for 2011 and 2012.