Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2013. Miller paid $664,000 in cash to the owners of Taylor to acquire these shares. In addition, the remaining 20 percent of Taylor shares continued to trade at a total value of $166,000 both before and after Millers acquisition.

On January 1, 2013, Taylor reported a book value of $600,000 (Common Stock = $300,000; Additional Paid-In Capital = $90,000; Retained Earnings = $210,000). Several of Taylors buildings that had a remaining life of 20 years were undervalued by a total of $80,000.

During the next three years, Taylor reported the following figures:

Year	Net Income			Dividends
2013	$	70,000		$	10,000
2014		90,000			15,000
2015		100,000			20,000

Determine the appropriate answers for each of the following questions:

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h.	Assume that the parent company has been applying the equity method to this investment. On December 31, 2015, the separate financial statements for the two companies present the following information:

	Miller Company	Taylor Company
Common stock	$500,000	$300,000
Additional paid-in capital	280,000	90,000
Retained earnings, 12/31/15	620,000	425,000

	What will be the consolidated balance of each of these accounts?

eBook & Resources

eBook: Allocating Acquired Goodwill to the Controlling and Noncontrolling InterestseBook: Consolidated Financial Reporting in the Presence of a Noncontrolling InteresteBook: Partial Ownership Consolidations (Acquisition Method)

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