Problem 08-13 (LO5)

A Company owns 75% of B Company and 40% of C Company. B Company owns 40% of C Company. The following information was assembled at December 31, Year 7.

	A Company			B Company			C Company
Cash	$	119,900		$	51,400		$	22,100
Accounts receivable		242,000			142,000			65,000
Inventory		319,000			248,000			79,000
Investment in C		76,690			120,440
Investment in B		1,707,630
Property, plant, and equipment		3,800,000			3,100,000			320,000
Accumulated depreciation		(910,000)			(572,000)			(129,000)
	$	5,355,220		$	3,089,840		$	357,100
Accounts payable	$	128,000		$	109,000		$	15,000
Bonds payable		400,000			700,000
Preferred shares		-			50,000
Common shares		1,200,000			400,000			200,000
Retained earnings, January 1		3,536,420			1,754,840			101,100
Net income		139,800			76,000			41,000
Dividends		(49,000)
	$	5,355,220		$	3,089,840		$	357,100

Additional Information

• A Company purchased its 40% interest in C Company on January 1, Year 4. On that date, the negative acquisition differential of $62,500 on the 40% investment was allocated to equipment with an estimated useful life of 10 years.
• A Company purchased its 75% of B Companys common shares on January 1, Year 6. On that date, the 100% implied acquisition differential was allocated $40,000 to buildings with an estimated useful life of 20 years, and $96,000 to patents to be amortized over eight years. The preferred shares of B Company are non-cumulative.
• On January 1, Year 6, B Company's accumulated depreciation was $450,000.
• On January 1, Year 7, B Company purchased its 40% interest in C Company for $120,440. The carrying amount of C Companys identifiable net assets approximated fair value on this date and C Company's accumulated depreciation was $27,900.
• The inventory of B Company contains a profit of $10,800 on merchandise purchased from A Company. The inventory of A Company contains a profit of $9,300 on merchandise purchased from C Company.
• On December 31, Year 7, A Company owes $41,000 to C Company and B Company owes $5,500 to A Company.
• Both A Company and B Company use the equity method to account for their investments but have made no equity method adjustments in Year 7.
• An income tax rate of 40% is used for consolidation purposes.

Required:

(a) Calculate non-controlling interests share of consolidated net income for Year 7. (Round your intermediate computations to nearest whole dollar value. Omit $ sign in your response.)

Non-controlling interests share of consolidated net income $

(b) Prepare a consolidated statement of retained earnings for Year 7. (Round your intermediate computations to nearest whole dollar value. Input all values as positive numbers. Omit $ sign in your response.)

A Company
Consolidated Retained Earnings Statement
For the Year Ended December 31, Year 7
Balance Jan. 1	$
Net income
Less: Dividends
Balance Dec. 31	$

(c) Prepare a consolidated balance sheet as at December 31, Year 7. (Amounts to be deducted should be indicated by a minus sign. Round your intermediate computations to nearest whole dollar value.)

A Company Consolidated Balance Sheet December 31, Year 7 Assets $ 0 Liabilities and Equity 0 A Company Consolidated Balance Sheet December 31, Year 7 Assets $ 0 Liabilities and Equity 0