Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

[ The following information applies to the questions displayed below. ] Apple Corporation acquires 80 percent of Berry Corporation's common shares on January 1, 20X2.

[The following information applies to the questions displayed below.]

Apple Corporation acquires 80 percent of Berry Corporation's common shares on January 1, 20X2. On January 2, 20X2, Berry acquires 60 percent of Coco Corporation's common stock. Information on company book values on the date of purchase and operating results for 20X2 is as follows:

Company Book Value Purchase Price 20X2 Operating Income
Apple Corporation $ 800,000 $ 100,000
Berry Corporation 300,000 $ 240,000 80,000
Coco Corporation 200,000 120,000 50,000

The fair values of the noncontrolling interests of Berry and Coco at the dates of acquisition were $60,000 and $80,000, respectively.

Required:

Select the correct answer for each of the following questions 1-5.

1. Consolidated net income assigned to the controlling interest for 20X2 is:

2. The amount of 20X2 income assigned to the noncontrolling interest of Coco Corporation is:

3. The amount of income assigned to the noncontrolling interest in the 20X2 consolidated income statement is:

4. Assume that Berry pays $150,000, rather than $120,000, to purchase 60 percent of Coco's common stock, and the fair value of the noncontrolling interest is $100,000 at the date of acquisition. If the differential is amortized over 10 years, the effect on 20X2 income assigned to the controlling shareholders will be a decrease of:

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Carl s. warren, James m. reeve, Philip e. fess

21st Edition

978-0324400205, 324225016, 324188005, 324400209, 9780324225013, 978-0324188004

More Books

Students also viewed these Accounting questions

Question

Did you provide headings that offer structure to the information?

Answered: 1 week ago