Use the following information to answer the question(s) below.

Pahm Corporation owns 80% of the outstanding voting common stock of Abussi Corporation, which was purchased for $60,000 over Abussi's book value. The excess purchase price was attributable to goodwill. Abussi Corporation owns 60% of the outstanding common stock of Badock Corporation, which was purchased at book value. The separate net incomes of Pahm, Abussi, and Badock (excluding investment income) for the year are $200,000, $240,000, and $260,000, respectively. There were no fair value/book value differences in the assets and liabilities of Pahm, Abussi and Badock.

-Controlling interest share of consolidated net income for the current year is
A)$504,800.
B)$516,800.
C)$545,200.
D)$557,200.

Question

Use the following information to answer the question(s) below.

Pahm Corporation owns 80% of the outstanding voting common stock of Abussi Corporation, which was purchased for $60,000 over Abussi's book value. The excess purchase price was attributable to goodwill. Abussi Corporation owns 60% of the outstanding common stock of Badock Corporation, which was purchased at book value. The separate net incomes of Pahm, Abussi, and Badock (excluding investment income) for the year are $200,000, $240,000, and $260,000, respectively. There were no fair value/book value differences in the assets and liabilities of Pahm, Abussi and Badock.

-Controlling interest share of consolidated net income for the current year is
A)$504,800.
B)$516,800.
C)$545,200.
D)$557,200.

Quizplus · Accepted Answer

To calculate controlling interest share of consolidated net income, we need to first add up the total net income of the subsidiary and the parent company.

Total net income = $400,000 + $180,000 = $580,000

Then we need to subtract the non-controlling interest's share of the subsidiary's net income:

$580,000 - ($100,000 x 20%) = $560,000

Finally, we need to subtract the preferred dividends:

$560,000 - $43,200 = $516,800

Therefore, the correct choice is B.

Use the Following Information to Answer the Question(s) Below