Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2019. During 2019, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of fair value allocations totaled $60,000 in 2019. Not including its investment in Harbor, Femur Co. had its own revenues of $4,500,000 and expenses of $3,000,000 for the year 2019.

The noncontrolling interest's share of the earnings of Harbor Corp. for 2019 is calculated to be:

a. What amount of consolidated net income for 2019 should be allocated to Femur's controlling interest in Harbor?

b. What amount would Femur Co. report as consolidated net income for 2019?

Question

Business

June Pineda

26 December, 17:48

Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2019. During 2019, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of fair value allocations totaled $60,000 in 2019. Not including its investment in Harbor, Femur Co. had its own revenues of $4,500,000 and expenses of $3,000,000 for the year 2019.

The noncontrolling interest's share of the earnings of Harbor Corp. for 2019 is calculated to be:

a. What amount of consolidated net income for 2019 should be allocated to Femur's controlling interest in Harbor?

b. What amount would Femur Co. report as consolidated net income for 2019?

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Answers (1)

Know the Answer?

Jude Kidd · Answer 1

The noncontrolling interest's share of the earnings of Harbor Corp. for 2019

= ($2,500,000 - $2,000,000 - $60,000) * 0.3 = 440,000*0.3 = $132,000

Amount of consolidated net income for 2019 should be allocated to Femur's controlling interest in Harbor

= $440,000 - $132,000 = $308,000

Amount Femur Co. would report as consolidated net income for 2019:

= $ (4,500,000-3,000,000) + $308,000 = $1,500,000 + $308,000 = $1,808,000