Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2023, for $537,000 in cash. Lowly's book value at that date was reported as $765,000, and the fair value of the noncontrolling interest was assessed at $358,000. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2024, Lowly acquired a 20 percent interest in Mighty. The price of $390,000 was equivalent to 20 percent of Mighty's book and fair value. Neither company has paid dividends since these acquisitions occurred. On January 1, 2024, Lowly's book value was $1,012,000, a figure that rises to $1,065,500 (common stock of $300,000 and retained earnings of $765,500) by year-end. Mighty's book value was $1.95 million at the beginning of 2024 and $2.05 million (common stock of $1 million and retained earnings of $1,050,000) at December 31, 2024. No intra-entity transactions have occurred, and no additional stock has been sold. Each company applies the initial value method in accounting for the individual investments. Required: a. Prepare worksheet entries which are required to consolidate these two companies for 2024. b. What is the net income attributable to the noncontrolling interest for this year? Complete this question by entering your answers in the tabs below Required A Required B View transaction list Journal entry worksheet < 1 2 3 4 5 Prepare entry *C to convert parent company figures to equity method. > Prev 6 of 7 Next>
Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2023, for $537,000 in cash. Lowly's book value at that date was reported as $765,000, and the fair value of the noncontrolling interest was assessed at $358,000. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2024, Lowly acquired a 20 percent interest in Mighty. The price of $390,000 was equivalent to 20 percent of Mighty's book and fair value. Neither company has paid dividends since these acquisitions occurred. On January 1, 2024, Lowly's book value was $1,012,000, a figure that rises to $1,065,500 (common stock of $300,000 and retained earnings of $765,500) by year-end. Mighty's book value was $1.95 million at the beginning of 2024 and $2.05 million (common stock of $1 million and retained earnings of $1,050,000) at December 31, 2024. No intra-entity transactions have occurred, and no additional stock has been sold. Each company applies the initial value method in accounting for the individual investments. Required: a. Prepare worksheet entries which are required to consolidate these two companies for 2024. b. What is the net income attributable to the noncontrolling interest for this year? Complete this question by entering your answers in the tabs below Required A Required B View transaction list Journal entry worksheet < 1 2 3 4 5 Prepare entry *C to convert parent company figures to equity method. > Prev 6 of 7 Next>
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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Transcribed Image Text:Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2023, for $537,000 in cash. Lowly's book value at
that date was reported as $765,000, and the fair value of the noncontrolling interest was assessed at $358,000. Any excess
acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January
1, 2024, Lowly acquired a 20 percent interest in Mighty. The price of $390,000 was equivalent to 20 percent of Mighty's book and fair
value.
Neither company has paid dividends since these acquisitions occurred. On January 1, 2024, Lowly's book value was $1,012,000, a
figure that rises to $1,065,500 (common stock of $300,000 and retained earnings of $765,500) by year-end. Mighty's book value was
$1.95 million at the beginning of 2024 and $2.05 million (common stock of $1 million and retained earnings of $1,050,000) at
December 31, 2024. No intra-entity transactions have occurred, and no additional stock has been sold. Each company applies the
initial value method in accounting for the individual investments.
Required:
a. Prepare worksheet entries which are required to consolidate these two companies for 2024.
b. What is the net income attributable to the noncontrolling interest for this year?
Complete this question by entering your answers in the tabs below
Required A Required B
View transaction list
Journal entry worksheet
<
1
2
3
4 5
Prepare entry *C to convert parent company figures to equity method.
>
Prev
6 of 7
Next>
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