7 On January 1, 2015, Port Imports Inc. acquired 90% of the common shares of Spanish Imports Ltd. in exchange for a new issue of its own shares valued at $4,320,000. At that date the shareholders' equity section of Spanish Imports Ltd's balance sheet was as follows: Preferred shares $ 500,000 Common shares 3,000,000 Retained earnings 1,600,000 Total shareholders' equity $5,100,000 The preferred shares were cumulative and non-participating with a dividend rate of 4% per year and were redeemable at 108. Dividends had not been paid for 2014. Any acquisition differential was allocated to goodwill. During 2015, goodwill was tested and there was an impairment loss of $40,000. During 2015, Port Imports Ltd. had a net income of $2,100,000 and paid dividends of $620,000 and Spanish Imports Ltd. had a net income of $440,000 and paid dividends of $140,000. The only transaction between the two companies was the sale of a parcel of land from Spanish Imports to its parent company. The land was sold for $500,000 and had cost Spanish Imports $450,000 when originally purchased. The gain was taxable at the capital gains rate of 25%. Required: a. What is the amount of the non-controlling interest shown on the consolidated balance sheet of Portuguese Imports Inc, as at December 31, 2015? For NCls, show the calculations for common and preferred shareholders separately. 2 b. Calculate consolidated net income for year ending December 31, 2015. You MUST show the net income attributable to the parent, NCI common and NCI preferred. Assume Port does not own any of the preferred shares of Spanish. Hint: Acquisition differential = $260,000 = 7 On January 1, 2015, Port Imports Inc. acquired 90% of the common shares of Spanish Imports Ltd. in exchange for a new issue of its own shares valued at $4,320,000. At that date the shareholders' equity section of Spanish Imports Ltd's balance sheet was as follows: Preferred shares $ 500,000 Common shares 3,000,000 Retained earnings 1,600,000 Total shareholders' equity $5,100,000 The preferred shares were cumulative and non-participating with a dividend rate of 4% per year and were redeemable at 108. Dividends had not been paid for 2014. Any acquisition differential was allocated to goodwill. During 2015, goodwill was tested and there was an impairment loss of $40,000. During 2015, Port Imports Ltd. had a net income of $2,100,000 and paid dividends of $620,000 and Spanish Imports Ltd. had a net income of $440,000 and paid dividends of $140,000. The only transaction between the two companies was the sale of a parcel of land from Spanish Imports to its parent company. The land was sold for $500,000 and had cost Spanish Imports $450,000 when originally purchased. The gain was taxable at the capital gains rate of 25%. Required: a. What is the amount of the non-controlling interest shown on the consolidated balance sheet of Portuguese Imports Inc, as at December 31, 2015? For NCls, show the calculations for common and preferred shareholders separately. 2 b. Calculate consolidated net income for year ending December 31, 2015. You MUST show the net income attributable to the parent, NCI common and NCI preferred. Assume Port does not own any of the preferred shares of Spanish. Hint: Acquisition differential = $260,000 =