The stockholder’s equity accounts of Pen Corporation and Sin Corporation at December 31, 2017, were as follows (in thousands): Pen Corporation Sin Corporation Capital stock $1,200 $ 500 Retained earnings 500 100 Total $1,700 $ 600 On January 1, 2018, Pen Corporation acquired an 80 percent interest in Sin Corporation for $580,000. The excess fair value was due to Sin Corporation’s equipment being undervalued by $50,000 and unrecorded patents. The undervalued equipment had a 5-year remaining useful life when Pen acquired its interest. Patents are amortized over 10 years. The income and dividends of Pen and Sin are as follows: Pen Sin 2018 2019 2018 2019 Net income $ 340 $ 350 $120 $150 Dividends 240 250 80 90 [فاصل التفاف النص] REQUIRED: Assume that Pen Corporation uses the equity method of accounting for its investment in Sin. Determine consolidated net income for Pen Corporation and Subsidiary for 2018. Compute the balance of Pen’s Investment in Sin account at December 31, 2018. Compute non-controlling interest share for 2018. Compute non-controlling interest at December 31, 2019.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 21P

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Question

The stockholder’s equity accounts of Pen Corporation and Sin Corporation at December 31, 2017, were as follows (in thousands):

	Pen Corporation	Sin Corporation
Capital stock	$1,200	$ 500
Retained earnings	500	100
Total	$1,700	$ 600

On January 1, 2018, Pen Corporation acquired an 80 percent interest in Sin Corporation for $580,000. The excess fair value was due to Sin Corporation’s equipment being undervalued by $50,000 and unrecorded patents. The undervalued equipment had a 5-year remaining useful life when Pen acquired its interest. Patents are amortized over 10 years.

The income and dividends of Pen and Sin are as follows:

	Pen	Sin
2018	2019	2018	2019
Net income	$ 340	$ 350	$120	$150
Dividends	240	250	80	90

[فاصل التفاف النص]

REQUIRED:

Assume that Pen Corporation uses the equity method of accounting for its investment in Sin.

Determine consolidated net income for Pen Corporation and Subsidiary for 2018.

Compute the balance of Pen’s Investment in Sin account at December 31, 2018.

Compute non-controlling interest share for 2018.

Compute non-controlling interest at December 31, 2019.

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