On January 1, 2019, Uncle Company purchased 80 percent of Nephew Company's capital stock for $660,000 in cash and other assets. Nephew had a book value of $790,000, and the 20 percent noncontrolling interest fair value was $165,000 on that date. On January 1, 2021, Nephew had acquired 30 percent of Uncle for $334,000. Uncle's appropriately adjusted book value as of that date was $1,080,000. Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $30,000 in dividends to shareholders each year and Nephew distributes $4,000 annually. Any excess fair-value allocations are amortized over a 10-year period. Year 2019 2020 2021 Uncle Company $ 101,000 a. b. 180,000 219,000 Nephew Company $ 42,600 48,600 55,800 a. 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? b. What is the net income attributable to the noncontrolling interest for 2021? Answer is complete but not entirely correct. Subsidiary income recognized Noncontrolling interest's share of income $ S Amount 41,200 X 12,100 X
On January 1, 2019, Uncle Company purchased 80 percent of Nephew Company's capital stock for $660,000 in cash and other assets. Nephew had a book value of $790,000, and the 20 percent noncontrolling interest fair value was $165,000 on that date. On January 1, 2021, Nephew had acquired 30 percent of Uncle for $334,000. Uncle's appropriately adjusted book value as of that date was $1,080,000. Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $30,000 in dividends to shareholders each year and Nephew distributes $4,000 annually. Any excess fair-value allocations are amortized over a 10-year period. Year 2019 2020 2021 Uncle Company $ 101,000 a. b. 180,000 219,000 Nephew Company $ 42,600 48,600 55,800 a. 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? b. What is the net income attributable to the noncontrolling interest for 2021? Answer is complete but not entirely correct. Subsidiary income recognized Noncontrolling interest's share of income $ S Amount 41,200 X 12,100 X
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Transcribed Image Text:On January 1, 2019, Uncle Company purchased 80 percent of Nephew Company's capital stock for
$660,000 in cash and other assets. Nephew had a book value of $790,000, and the 20 percent
noncontrolling interest fair value was $165,000 on that date. On January 1, 2021, Nephew had acquired
30 percent of Uncle for $334,000. Uncle's appropriately adjusted book value as of that date was
$1,080,000.
Separate operating income figures (not including investment income) for these two companies follow.
In addition, Uncle declares and pays $30,000 in dividends to shareholders each year and Nephew
distributes $4,000 annually. Any excess fair-value allocations are amortized over a 10-year period.
Year
2019
2020
2021
Uncle
Company
$ 101,000
180,000
219,000
a.
b.
Nephew
Company
$ 42,600
48,600
55,800
a. 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?
b. What is the net income attributable to the noncontrolling interest for 2021?
Answer is complete but not entirely correct.
Subsidiary income recognized
Noncontrolling interest's share of income
$
$
Amount
41,200 X
12,100 X
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