106. Kurton Inc. owned 90% of Luvyn Corp.’s voting common stock. The
consideration paid exceeded book value by $110,000. Of this amount, one half is
attributable to a patent and is to be amortized over 5 years. Luvyn held 20% of
Kurton’s voting common stock which cost $28,000 more than fair value.
During the current year, Kurton reported operating income of $224,000 and
dividend income from Luvyn of $37,800. At the same time, Luvyn reported
operating income of $70,000 and dividend income from Kurton of $19,600.
Required:
Prepare a schedule to show
consolidated net income
.
107. Kurton Inc. owned 90% of Luvyn Corp.’s voting common stock. The
consideration paid exceeded book value by $110,000. Of this amount, one half is
attributable to a patent and is to be amortized over 5 years. Luvyn held 20% of
Kurton’s voting common stock which cost $28,000 more than fair value.
During the current year, Kurton reported operating income of $224,000 and
dividend income from Luvyn of $37,800. At the same time, Luvyn reported
operating income of $70,000 and dividend income from Kurton of $19,600.
Required:
Prepare a schedule to show Kurton’s share of
controlling interest in Luvyn’s net
income
.
108. Wilkins Inc. owned 60% of Motumbo Co. During the current year, Motumbo
reported net income of $280,000 but paid a total cash dividend of only $56,000.
Required:
Assuming an income tax rate of 30%, what amount of
Deferred Income Tax
Liability
arising this year must be recognized in the
consolidated balance sheet
?
109. On January 1, 2010, Mace Co. acquired 75% of Lance Co.’s outstanding
common stock. On the same date, Lance acquired an 80% interest in Curle Co.
Both of these investments were acquired when book value was equal to fair value
of identifiable net assets acquired. Both of these investments were accounted
using the
initial value method
. No dividends were distributed by either Lance or
Curle during 2010 or 2011. Mace paid cash dividends each year equal to 40% of
operating income. Reported operating income totals for 2010 were as follows:
Following are the 2011 financial statements for these three companies. Curle
made numerous transfers of inventory to Lance since the takeover: $112,000
(2010) and $140,000 (2011). These transactions included the same markup
applicable to Curle’s outside sales. In each of these years, Lance carried 20% of
this inventory into the succeeding year before disposing of it.
An effective income tax rate of 45% was applicable to all companies.
Required:
Determine the
total
amount of goodwill
for the January 1, 2010 acquisition of
Curle Co. and for the acquisition of Lance Co. on the same date.
110. On January 1, 2010, Mace Co. acquired 75% of Lance Co.’s outstanding
common stock. On the same date, Lance acquired an 80% interest in Curle Co.
Both of these investments were acquired when book value was equal to fair value
of identifiable net assets acquired. Both of these investments were accounted
using the
initial value method
. No dividends were distributed by either Lance or
Curle during 2010 or 2011. Mace paid cash dividends each year equal to 40% of
operating income. Reported operating income totals for 2010 were as follows:
Following are the 2011 financial statements for these three companies. Curle
made numerous transfers of inventory to Lance since the takeover: $112,000
(2010) and $140,000 (2011). These transactions included the same markup
applicable to Curle’s outside sales. In each of these years, Lance carried 20% of
this inventory into the succeeding year before disposing of it.
An effective income tax rate of 45% was applicable to all companies.
Required:
Determine the
non-controlling interest in Curle Co.’s net income
for the year
2011.
111. On January 1, 2010, Mace Co. acquired 75% of Lance Co.’s outstanding
common stock. On the same date, Lance acquired an 80% interest in Curle Co.
Both of these investments were acquired when book value was equal to fair value
of identifiable net assets acquired. Both of these investments were accounted
using the
initial value method
. No dividends were distributed by either Lance or
Curle during 2010 or 2011. Mace paid cash dividends each year equal to 40% of
operating income. Reported operating income totals for 2010 were as follows:
Following are the 2011 financial statements for these three companies. Curle
made numerous transfers of inventory to Lance since the takeover: $112,000
(2010) and $140,000 (2011). These transactions included the same markup
applicable to Curle’s outside sales. In each of these years, Lance carried 20% of
this inventory into the succeeding year before disposing of it.
An effective income tax rate of 45% was applicable to all companies.
Required:
Determine the
non-controlling interest in Lace Co.’s net income
for the year
2011.
112. On January 1, 2010, Mace Co. acquired 75% of Lance Co.’s outstanding
common stock. On the same date, Lance acquired an 80% interest in Curle Co.
Both of these investments were acquired when book value was equal to fair value
of identifiable net assets acquired. Both of these investments were accounted
using the
initial value method
. No dividends were distributed by either Lance or
Curle during 2010 or 2011. Mace paid cash dividends each year equal to 40% of
operating income. Reported operating income totals for 2010 were as follows:
Following are the 2011 financial statements for these three companies. Curle
made numerous transfers of inventory to Lance since the takeover: $112,000
(2010) and $140,000 (2011). These transactions included the same markup
applicable to Curle’s outside sales. In each of these years, Lance carried 20% of
this inventory into the succeeding year before disposing of it.
An effective income tax rate of 45% was applicable to all companies.