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On January 1, 2019, Uncle Company purchased 80 percent of Nephew Company's capital stock for $686,400 in cash and other assets. Nephew had a book

On January 1, 2019, Uncle Company purchased 80 percent of Nephew Company's capital stock for $686,400 in cash and other assets. Nephew had a book value of $825,000, and the 20 percent noncontrolling interest fair value was $171,600 on that date. On January 1, 2021, Nephew had acquired 30 percent of Uncle for $297,250. Uncle's appropriately adjusted book value as of that date was $957,500.

Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $20,000 in dividends to shareholders each year and Nephew distributes $5,000 annually. Any excess fair-value allocations are amortized over a 10-year period.

Year Uncle Company Nephew Company
2019 $ 115,000 $ 40,400
2020 121,000 42,600
2021 168,000 63,600

A. Assume that Uncle applies the equity method to account for this investment in Nephew. What is the subsidiary's income recognized by Uncle in 2021?

B. What is the net income attributable to the noncontrolling interest for 2021?

image text in transcribed \begin{tabular}{|l|l|l|} \hline & & Amount \\ \hline a. & Subsidiary income recognized & \\ \hline b. & Noncontrolling interest's share of income & \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline & & Amount \\ \hline a. & Subsidiary income recognized & \\ \hline b. & Noncontrolling interest's share of income & \\ \hline \end{tabular}

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