Question
Reyes Company acquires 70% of Landers Company for $550,000 on January 1, 2019. Landers reported common stock of $380,000 and retained earnings of $195,000 on
Reyes Company acquires 70% of Landers Company for $550,000 on January 1, 2019. Landers reported common stock of $380,000 and retained earnings of $195,000 on that date. Equipment was undervalued by $45,000 and buildings were undervalued by $52,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Landers earns income and pays dividends as follows:
|
| 2019 |
| 2020 |
| 2021 | ||||||
| Net income | $ | 110,000 |
|
| $ | 135,000 |
|
| $ | 147,000 |
|
| Dividends |
| 45,000 |
|
|
| 50,000 |
|
|
| 55,000 |
|
Assume the partial equity method is applied.
Compute the noncontrolling interest in Landers at December 31, 2020.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Intermediate Accounting Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
12th Canadian edition
119-49633-5, 1119496497, 1119496330, 978-1119496496
