On January 1, 2016, Aspen Company acquired 80 percent of Birch Company's voting stock for $458,000. Birch reported a $437,500 book value and the fair value of the noncontrolling interest was $114,500 on that date. Then, on January 1, 2017, Birch acquired 80 percent of Cedar Company for $216,000 when Cedar had a $216,000 book value and the 20 percent noncontrolling interest was valued at $54,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life These companies report the following financial information. Investment income figures are not included 2016 2017 2018 Sales: Aspen Company Birch Company Cedar Company Expenses: Aspen Compan Birch Company Cedar Company Dividends declared: Aspen Company Birch Company Cedar Company 555,000 622,500 835,000 254,750 310,000 451, 000 Not available 194,200 238,800 $ 455,000 600,000 692,500 208,000 241,000 385, 000 Not available 180,000 194,000 15,000 Not available $ 15,000 $ 30,000 18,000 4,000 40,000 18,000 12,000 Assume that each of the following questions is independent: a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Aspen's Investment in Birch Company account b. What is the consolidated net income for this business combination for 2018? c. What is the net income attributable to the noncontrolling interest in 2018? d. Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year: Date Amount 12/31/16 $11,300 12/31/17 20,300 12/31/18 30,900 What is the accrual-based net income of Birch in 2017 and 2018, respectively? Complete this question by entering your answers in the tabs below Req A to CReq D a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Aspen's Investment in Birch Company account? b. What is the consolidated net income for this business combination for 2018? c. What is the net income attributable to the noncontrolling interest in 2018? Show less a. Investment in Birch b. Consolidated net income C. Noncontrolling interests' share of the consolidated net income Req A to C Req D> Date Amount 12/31/16 $11,300 12/31/1720,300 12/31/18 30,900 What is the accrual-based net income of Birch in 2017 and 2018, respectively? Complete this question by entering your answers in the tabs below Req A to CReq D Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year: Date Amount 12/31/16 12/31/17 12/31/18 $11,300 20,300 30,900 What is the accrual-based net income of Birch in 2017 and 2018, respectively? Show less 2017 2018 Realized income
