ADV. ACCT CONNECT STAND ALONE
ADV. ACCT CONNECT STAND ALONE
13th Edition
ISBN: 9781266295744
Author: Hoyle
Publisher: MCG
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Chapter 7, Problem 15P

On January 1, 2016, Uncle Company purchased 80 percent of Nephew Company’s capital stock for $500,000 in cash and other assets. Nephew had a book value of $600,000, and the 20 percent noncontrolling interest fair value was $125,000 on that date. On January 1, 2015, Nephew had acquired 30 percent of Uncle for $280,000. Uncle’s appropriately adjusted book value as of that date was $900,000.

  Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares aid pays $20,000 in dividends to shareholders each year aid Nephew distributes $5,000 annually. Any excess fair-value allocations are amortized over a 10-year period.

Year

Uncle

Company

Nephew

Company

2016 $ 90,000 $30,000
2017 120,000 40,000
2018 140,000 50,000
  1. a. Assume that Uncle applies the equity method to account for this investment in Nephew. What is the subsidiary’s income recognized by Uncle in 2018?
  2. b. What is the net income attributable to the noncontrolling interest for 2018?
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On January 1, 2016, Uncle Company purchased 80 percent of Nephew Company’s capital stock for $500,000 in cash and other assets. Nephew had a book value of $600,000, and the 20 percent noncontrolling interest fair value was $125,000 on that date. On January 1, 2015, Nephew had acquired 30 percent of Uncle for $280,000. Uncle’s appropriately adjusted book value as of that date was $900,000.Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $20,000 in dividends to shareholders each year and Nephew distributes $5,000 annually. Any excess fair-value allocations are amortized over a 10-year period.a. Assume that Uncle applies the equity method to account for this investment in Nephew. What is the subsidiary’s income recognized by Uncle in 2018?b. What is the net income attributable to the noncontrolling interest for 2018?
On January 1, 2016, Uncle Company purchased 80 percent of Nephew Company’s capital stock for $500,000 in cash and other assets. Nephew had a book value of $600,000, and the 20 percent noncontrolling interest fair value was $125,000 on that date. On January 1, 2015, Nephew had acquired 30 percent of Uncle for $280,000. Uncle’s appropriately adjusted book value as of that date was $900,000.Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $20,000 in dividends to shareholders each year and Nephew distributes $5,000 annually. Any excess fair-value allocations are amortized over a 10-year period. Year Uncle Company Nephew Company 2016 $90000 $30000 2017 120000 40000 2018 140000 50000 a. Assume that Uncle applies the equity method to account for this investment in Nephew. What is the subsidiary’s income recognized by Uncle in 2018?b. What is the net income attributable to the noncontrolling…
On January 1, 2016, Uncle Company purchased 80 percent of Nephew Company's capital stock for $512,000 in cash and other assets. Nephew had a book value of $626,000 and the 20 percent noncontrolling interest fair value was $128,000 on that date. On January 1, 2015, Nephew had acquired 30 percent of Uncle for $283,000. Uncle's appropriately adjusted book value as of that date was $910,000.   Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $30,000 in dividends to shareholders each year and Nephew distributes $4,000 annually. Any excess fair-value allocations are amortized over a 10-year period.     Year UncleCompany NephewCompany 2016 $ 138,000   $ 34,000   2017   203,000     51,800   2018   236,000     52,600       Assume that Uncle applies the equity method to account for this investment in Nephew. What is the subsidiary's income recognized by Uncle in 2018? What is the net income…
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