Question
Problem 7-15 (Algo) (LO 7-3) On January 1, 2019, Uncle Company purchased 80 percent of Nephew Company's capital stock for $656,000 in cash and other
Problem 7-15 (Algo) (LO 7-3)
On January 1, 2019, Uncle Company purchased 80 percent of Nephew Company's capital stock for $656,000 in cash and other assets. Nephew had a book value of $808,000, and the 20 percent noncontrolling interest fair value was $164,000 on that date. On January 1, 2021, Nephew had acquired 30 percent of Uncle for $315,250. Uncle's appropriately adjusted book value as of that date was $1,017,500.
Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $25,000 in dividends to shareholders each year and Nephew distributes $6,000 annually. Any excess fair-value allocations are amortized over a 10-year period.
Year | Uncle Company | Nephew Company | ||||
2019 | $ | 136,000 | $ | 48,800 | ||
2020 | 207,000 | 59,000 | ||||
2021 | 215,000 | 66,600 | ||||
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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?
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What is the net income attributable to the noncontrolling interest for 2021?
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