The DeBlois Family Co. acquired 40% of Orange Beach Co. with a $500,000 payment on January 1, 2023. The equivalent net book value (40% share) of Orange Beach on the date of acquisition was $425,000. $50,000 of the excess payment was attributable to equipment with a 10-year remaining life. The remainder of the excess payment was not attributable to any identifiable item. Orange Beach Co. Reported net income of $40,000 in 2023 No dividends were paid out. On January 1, 2024, DeBlois Family Co.Acquired an additional 50% ownership share in Orange Beach Co. With a cash payment of $700,000. The fair value of the noncontrolling interest was determined to be $140,000 on the date of acquisition. The total fair value of Orange Beach's identifiable assets and liabilities on January 1, 2024, was $1,000,000. The trading value of stock shares remained the same as acquisition date prices for several months after January 1, 2024. Orange Beach Co. Reported 2024 income of $100,000 and expenses of $50,000. How much net income should be recognized by the noncontrolling interest? Question 10 options: $5,000 $4,500 $50,000 $45,000
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The DeBlois Family Co. acquired 40% of Orange Beach Co. with a $500,000 payment on January 1, 2023. The equivalent net book value (40% share) of Orange Beach on the date of acquisition was $425,000. $50,000 of the excess payment was attributable to equipment with a 10-year remaining life. The remainder of the excess payment was not attributable to any identifiable item. Orange Beach Co. Reported net income of $40,000 in 2023 No dividends were paid out. On January 1, 2024, DeBlois Family Co.Acquired an additional 50% ownership share in Orange Beach Co. With a cash payment of $700,000. The fair value of the noncontrolling interest was determined to be $140,000 on the date of acquisition. The total fair value of Orange Beach's identifiable assets and liabilities on January 1, 2024, was $1,000,000. The trading value of stock shares remained the same as acquisition date prices for several months after January 1, 2024.
Orange Beach Co. Reported 2024 income of $100,000 and expenses of $50,000. How much net income should be recognized by the noncontrolling interest?
Question 10 options:
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$5,000
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$4,500
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$50,000
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$45,000
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