Assume on January 1, 2018, a parent company acquired a 75% interest in a subsidiary’s voting common stock. On the date of acquisition, the fair value of the subsidiary’s net assets equaled their reported book values. On January 1, 2020, the subsidiary purchased a building for $777,600 The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2022, the subsidiary sold the building to the parent for $648,000 The parent estimated that the building had a six-year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2022, the parent’s “stand-alone” income (i.e., net income before recording any adjustments related to preconsolidation investment accounting) is $810,000 . The subsidiary’s recorded net income is $162,000. Based on this information, determine the balance for Consolidated income attributable to noncontrolling interest: Select one: a. $24,300 b. $43,200 c. $40,500 d. $27,000
Noncontrolling interest and intercompany sale of
Assume on January 1, 2018, a parent company acquired a 75% interest in a subsidiary’s voting common stock. On the date of acquisition, the fair value of the subsidiary’s net assets equaled their reported book values. On January 1, 2020, the subsidiary purchased a building for $777,600 The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2022, the subsidiary sold the building to the parent for $648,000 The parent estimated that the building had a six-year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2022, the parent’s “stand-alone” income (i.e., net income before recording any adjustments related to preconsolidation investment accounting) is $810,000 . The subsidiary’s recorded net income is $162,000.
Based on this information, determine the balance for Consolidated income attributable to noncontrolling interest:
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