Question
Can someone please help with this problem? Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2017, for $444,000 in cash.
Can someone please help with this problem?
Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2017, for $444,000 in cash. Lowly's book value at that date was reported as $635,000 and the fair value of the non controlling interest was assessed at $296,000. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2018, Lowly acquired a 20 percent interest in Mighty. The price of $342,000 was equivalent to 20 percent of Mighty's book and fair value.
Neither company has paid dividends since these acquisitions occurred. On January 1, 2018, Lowly's book value was $871,000, a figure that rises to $926,000 (common stock of $300,000 and retained earnings of $626,000) by year-end. Mighty's book value was $1.71 million at the beginning of 2018 and $1.81 million (common stock of $1 million and retained earnings of $810,000) at December 31, 2018. No intra-entity transactions have occurred and no additional stock has been sold. Each company applies the initial value method in accounting for the individual investments.
- Prepare worksheet entries which are required to consolidate these two companies for 2018?
- What is the net income attributable to the noncontrolling interest for this year?
Thanks.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started