On January 1, 2012, Jones Company bought 15% of Whitton Company. Jones paid $150,000 for these shares, an amount that exactly equaled the proportionate book value of Whitton. On January 1, 2013, Whitton acquired 80% ownership of Jones. The following data are available concerning Whitton's acquisition of Jones: Excess fair value over book value (assigned to trademarks) is amortized over 20 years.
The initial value method is used by both companies.
The following information is available regarding Jones and Whitton:
Compute the non-controlling interest in net income for 2013.

Question

On January 1, 2012, Jones Company bought 15% of Whitton Company. Jones paid $150,000 for these shares, an amount that exactly equaled the proportionate book value of Whitton. On January 1, 2013, Whitton acquired 80% ownership of Jones. The following data are available concerning Whitton's acquisition of Jones:  Excess fair value over book value (assigned to trademarks) is amortized over 20 years.
The initial value method is used by both companies.
The following information is available regarding Jones and Whitton: 
Compute the non-controlling interest in net income for 2013.

Quizplus · Accepted Answer

To calculate the non-controlling interest, we need to first find out the consolidated net income (Jones + Whitton).

Consolidated Net Income = (Jones Net Income + Whitton Net Income - Excess Fair Value Amortization)

Consolidated Net Income = (24,000 + 85,000 - 10,000) = 99,000

Non-controlling interest = (Consolidated Net Income - Whitton's share of net income)

Non-controlling interest = (99,000 - (80% * 85,000)) = 10,800

Therefore, the non-controlling interest in net income for 2013 is $10,800 (Option B).

On January 1, 2012, Jones Company Bought 15% of Whitton