French Company acquired 80 percent of the outstanding shares of Godiva Company for $152 in cash.(No goodwill was present at the time of acquisition.)The net income for the current year for French Company is $100.The net income for the current year for Godiva Company is $20.There were no intercompany sales.The book value and fair value of Godiva's assets and liabilities were equal at the acquisition date.What is the net income on the consolidated income statement for the current year?

Question

Quizplus · Accepted Answer

The consolidated net income includes 100% of French Company's net income ($100) and 100% of Godiva Company's net income ($20), totaling $120. However, since French Company owns only 80% of Godiva, the remaining 20% ($4) is attributed to the non-controlling interest. Therefore, the consolidated net income is $120 - $4 = $116.

French Company Acquired 80 Percent of the Outstanding Shares of Godiva