Question
On January 1, 2015, Parula Corporation owned 90% of the 14,400 outstanding shares of Sope Inc. Parula accounts for its investment using the equity method.
On January 1, 2015, Parula Corporation owned 90% of the 14,400 outstanding shares of Sope Inc. Parula accounts for its investment using the equity method. On January 1, 2015, Sope had shareholders equity of $304,000, of which $56,000 was common shares and $248,000 was retained earnings. The balance in the investment in Sope account on the books of Parula was $453,600 on that date. The entire acquisition differential was allocated to some equipment with a remaining useful life of 10 years at January 1, 2015.
During 2015, Sope reported a net income of $96,000, earned evenly over the year and paid dividends of $48,000 at mid-year. On April 1, 2015, Sope issued 3,600 new shares at a price of $35 per share. Parula did not acquire any of these shares. In 2015, Parula earned net income of $240,000 from its own activities.
Required:
- a)What consolidated net income should Parula report for 2015?
- b)What is the parents share of Parulas consolidated net income for 2015?
- c)What amount should be shown as noncontrolling interest on Parulas consolidated
- balance sheet as at December 31, 2015?
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