Pawn Corporation acquired 70 percent of Shop Corporation's voting stock on January 1, 20OX2, for $416,500. The fair value of thenoncontrolling interest was $178,500 at the date of acquisition. Shop reported common stock outstanding of $200,000 and retainedearnings of $350,000. The differential is assigned to buildings with an expected life of 15 years at the date of acquisition.On December 31, 20X4, Pawn had $25,000 of unrealized profits on its books from inventory sales to Shop, and Shop had $40,000 ofunrealized profit on its books from inventory sales to Pawn. All inventory held at December 31, 20X4, was sold during 20X5.On December 31, 20X5, Pawn had $14,000 of unrealized profit on its books from inventory sales to Shop, and Shop had unrealizedprofit on its books of $55,000 from inventory sales to Pawn.Pawn reported income from its separate operations (excluding income on its investment in Shop and amortization of purchasedifferential) of $118,000 in 20X5, and Shop reported net income of $65,00.Required:Compute consolidated net income and income assigned to the controlling interest in the 20X5 consolidated income statement.Consolidated net incomeIncome assigned to the controlling interest

The question is based on the concept of Financial Accounting.

Answered: Pawn Corporation acquired 70 percent of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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