On January 1, 2019, Aspen Company acquired 80 percent of Birch Company's voting stock for $386,000. Birch reported a $347,500 book value, and the fair value of the noncontrolling interest was $96,500 on that date. Then, on January 1, 2020, Birch acquired 80 percent of Cedar Company for $160,000 when Cedar had a $173,000 book value and the 20 percent noncontrolling interest was valued at $40,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name a 30-year remaining life. These companies report the following financial information. Investment income figures are not included. 2019 2020 2021 $ 462,500 $ 625,000 $ 900,000 227,250 390, 750 594,400 Not available 212,600 222,200 Sales: Aspen Company Birch Company Cedar Company Expenses: Aspen Company Birch Company Cedar Company Dividends declared: Aspen Company Birch Company Cedar Company $ 375,000 $ 530,000 $ 547,500 164,000 309,000 505,000 Not available 194,000 183,000 18,000 $ 8,000 30,000 $ 40,000 20,000 20,000 4,000 12,000 Not available 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, 2020, balance in Aspen's Investment in Birch Company account? b. What is the consolidated net income for this business combination for 2021? c. What is the net income attributable to the noncontrolling interest in 2021? 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 12/31/19 12/31/20 12/31/21 Amount $18,400 21,300 33,400 What is the accrual-based net income of Birch in 2020 and 2021, respectively? Complete this question by entering your answers in the tabs below. Req A to C Req D a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2020, balance in Aspen's Investment in Birch Company account? b. What is the consolidated net income for this business combination for 2021? c. What is the net income attributable to the noncontrolling interest in 2021? Show less Amount a. b. Investment in Birch at December 31, 2020 Consolidated net income Noncontrolling interests' share of the consolidated net income C. Complete this question by entering your answers in the tabs below. Req A to C Req 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 12/31/19 12/31/20 12/31/21 $18,400 21,300 33,400 What is the accrual-based net income of Birch in 2020 and 2021, respectively? Show less 2020 2021 Accrual-based net income
