Pabari Corporation owns an 80% interest in Alders Corporation and Alders owns a 60% interest in Babao Corporation.Both interests were acquired at a cost equal to book value equal to fair value.During 2010,Alders sells land to Babao at a profit of $12,000.Babao still holds the land at December 31,2010.Net income(loss)of the three companies (excluding investment income)for 2010 are: Controlling interest share of consolidated net income and noncontrolling interest share,respectively,for 2010 are

Question

Pabari Corporation owns an 80% interest in Alders Corporation and Alders owns a 60% interest in Babao Corporation.Both interests were acquired at a cost equal to book value equal to fair value.During 2010,Alders sells land to Babao at a profit of $12,000.Babao still holds the land at December 31,2010.Net income(loss)of the three companies (excluding investment income)for 2010 are:  Controlling interest share of consolidated net income and noncontrolling interest share,respectively,for 2010 are

Quizplus · Accepted Answer

D)
Noncont.interest share: $8,400 Profit + ($12,000)Loss
Pabari Alders Babao
Separate incomes $180,000 $72,000 $(30,000)
Less: Unrealized profit on land _______ (12,000)_______
Subtotal $180,000 $60,000 (30,000)
Allocate Babao's net loss to
Alders ($30,000)× 60% _______ (18,000)18,000
Subtotal 180,000 42,000 (12,000)
Allocate 80% of Alders
income to Pabari 33,600 (33,600)
Controlling interest share of consolidated
net income $213,600 _______ _______
Noncontrolling interest share $8,400 $12,000

Pabari Corporation Owns an 80% Interest in Alders Corporation and Alders