Pandi Corporation owns 90% of Abdi Corporation, Abdi Corporation owns 85% of Bandi Corporation, and Bandi Corporation owns 5% of Abdi Corporation. The separate net incomes (excluding investment income) of Pandi, Abdi, and Bandi are $100,000, $40,000, and $55,000, respectively. Assume the investments were acquired at a cost equal to the book value of each investment, which also equals the fair value. a. Calculate revised net incomes for Pandi, Abdi, and Bandi by using the conventional method. b. Determine the controlling interest share of consolidated net income and the noncontrolling interest shares.
Pandi Corporation owns 90% of Abdi Corporation, Abdi Corporation owns 85% of Bandi Corporation, and Bandi Corporation owns 5% of Abdi Corporation. The separate net incomes (excluding investment income) of Pandi, Abdi, and Bandi are $100,000, $40,000, and $55,000, respectively. Assume the investments were acquired at a cost equal to the book value of each investment, which also equals the fair value. a. Calculate revised net incomes for Pandi, Abdi, and Bandi by using the conventional method. b. Determine the controlling interest share of consolidated net income and the noncontrolling interest shares.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pandi Corporation owns 90% of Abdi Corporation, Abdi Corporation owns 85% of Bandi Corporation, and
Bandi Corporation owns 5% of Abdi Corporation. The separate net incomes (excluding investment income)
of Pandi, Abdi, and Bandi are $100,000, $40,000, and $55,000, respectively. Assume the investments were
acquired at a cost equal to the book value of each investment, which also equals the fair value.
a. Calculate revised net incomes for Pandi, Abdi, and Bandi by using the conventional method.
b. Determine the controlling interest share of consolidated net income and the noncontrolling interest
shares.
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