Multilevel ownership and control: if a company establish multiple corporate levels through which they carryout diversified operations, i.e. a company may have a number of subsidiaries one of which is a retailer. When consolidated statements are prepared, they include companies in which the parent has only indirect investment along with direct ownership. The complexity of consolidation process increases as additional ownership levels are included. The amount of income and net assets assigned to controlling and non-controlling interest, and unrealized profit and losses to be eliminated, must be determined at each level of ownership. To choose: the correct amount to show the effect on income assigned to controlling shareholders when D pays $150,000 rather than $120,000, and if the differential amortized over 10 years.

Question

Want to see the full answer?

Answer 1

Question

Chapter 9, Problem 9.2.5E

To determine

Multilevel ownership and control:if a company establish multiple corporate levels through which they carryout diversified operations, i.e. a company may have a number of subsidiaries one of which is a retailer. When consolidated statements are prepared, they include companies in which the parent has only indirect investment along with direct ownership. The complexity of consolidation process increases as additional ownership levels are included. The amount of income and net assets assigned to controlling and non-controlling interest, and unrealized profit and losses to be eliminated, must be determined at each level of ownership.

To choose:the correct amount to show the effect on income assigned to controlling shareholders when D pays $150,000 rather than $120,000, and if the differential amortized over 10 years.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Required Information [The following information applies to the questions displayed below.] Apple Corporation acquires 80 percent of Berry Corporation's common shares on January 1, 20X2. On January 2, 20X2, Berry acquires 60 percent of Coco Corporation's common stock. Information on company book values on the date of purchase and operating results for 20X2 is as follows: Company Apple Corporation Berry Corporation Coco Corporation Required: Select the correct answer for each of the following questions. Multiple Choice The fair values of the noncontrolling interests of Berry and Coco at the dates of acquisition were $60,000 and $80,000, respectively. O $22,000. Book Value $ 800,000 300,000 200,000 O $46,000. Purchase Price $ 240,000 120,000 4. The amount of income assigned to the noncontrolling interest in the 20X2 consolidated income statement is: O $42.000. $20,000. 28X2 Operating Income $ 100,000 80,000 50,000

hf. Darnell Ltd. acquired 60 percent of Tisha Co. The acquisition calls for Darnell to issue an additional 100 shares to Tisha in one year if Tisha meets a predetermined sales goal. This contingent consideration a. should be reported only in the notes to the financial statement. b. should be valued at its fair value as of the acquisition date. c. should be valued at fair value as of the acquisition date and revalued at the year-end. d. should not be reported unless the goal is met.

Step Acquisition: Press Company acquires 15 percent of Secretary Company's common stock for P600,000 cash and carries the investment using the cost model. A few months later, Press purchases another 60 percent of Secretary Company's stock for P2,592,000. At that date, Secretary Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Secretary Company is P1,080,000.Determine the following (at full fair value)GoodwillNon-Controlling Interest (NCI)