Allocating Subsidiary's Net Income Between the Parent and Noncontrolling Interests Summer I 2009 (1)

Allocating Subsidiary's Net Income Between the Parent and Noncontrolling Interests Summer I 2009 (1)

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Accounting 401 Allocation of Subsidiary Net Income to Controlling and Noncontrolling Interests Summer I 2009 A. Let’s continue with the illustration from the notes on consolidation of partially- owned subsidiaries. Remember that Port acquired 80% of the outstanding common stock of Sort. Total fair value of Port’s interest is $4,800,000 and total fair value of Sort’s interest is $1,000,000. In addition, let’s say that excess fair value amortization of Sort’s net identifiable assets is $20,000 per period for five years and subsidiary reported net income for the current period is $125,000. B. To calculate the noncontrolling interest’s share of subsidiary net income, a schedule such as the following should be prepared:
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Unformatted text preview: Subsidiary reported net income $125,000 Less: Fair value to book value amortization 20,000 Adjusted net income of subsidiary 105,000 Noncontrolling interest percentage 20% Noncontrolling interest share of subsidiary net income $ 21,000 C. In order to report the noncontrolling interest’s share, overall consolidated net income is first determined. This amount is then allocated between the noncontrolling and controlling interests. For example, let’s assume the following: Consolidated revenues $422,000 Consolidated expenses 203,000 Consolidated net income $219,000 Allocated to noncontrolling interest 21,000 Allocated to controlling interest $198,000...
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This note was uploaded on 03/08/2012 for the course ACCT 401 taught by Professor Staff during the Summer '08 term at Texas A&M.

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