Problem 4 (Recommended: review slides 35-44) Delta acquires 70 percent of Gamma on September 1, 2020, and an additional 10 percent on November 1, 2021. Annual amortization of $8,400 attributed to the controlling interest relates to the first acquisition. Gamma reports the following figures for 2021: Revenues $ 500,000 Expenses $ 350,000 Retained earnings, 1/1/21 $3,500,000 Dividend Paid $ 40,000 Common Stock $ 400,000 Without regard for this investment, Delta earns $480,000 in net income ($840,000 revenues less $360,000 expenses; incurred evenly throughout the year) during 2021. Prepare a schedule of consolidated net income and apportionment to non-controlling and controlling interests for 2021.
Problem 4 (Recommended: review slides 35-44)
Delta acquires 70 percent of Gamma on September 1, 2020, and an additional 10 percent on
November 1, 2021. Annual amortization of $8,400 attributed to the controlling interest relates to
the first acquisition. Gamma reports the following figures for 2021:
Revenues $ 500,000
Expenses $ 350,000
Dividend Paid $ 40,000
Common Stock $ 400,000
Without regard for this investment, Delta earns $480,000 in net income ($840,000 revenues less $360,000 expenses; incurred evenly throughout the year) during 2021.
Prepare a schedule of consolidated net income and apportionment to non-controlling and controlling interests for 2021.
The non-controlling interest would be considered as the companies that are called subsidiary. All these organization would be liable for the tax after deducting the amount from the controlling interest. These must be taken separately from the controlling interest.
When the organization has 100% control then, it is considered as parent organization and one with the lesser control would be subsidiary organization.
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