On January 1, 20X8, Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash. At that date, Stamp reported common stock outstanding of $200,000 and retained earnings of $100,000, and the fair value of the noncontrolling interest was $70,000. The book values and fair values of Stamp's assets and liabilities were equal, except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life. Stamp reported the following data for 20X8 and 20X9: Stamp Corporation Year Net Income Comprehensive Income Dividends Paid 20X8 $ 25,000 $ 30,000 $ 5,000 20X9 35,000 45,000 10,000 Package reported net income of $100,000 and paid dividends of $30,000 for both the years. Based on the preceding information, what is the amount of comprehensive income attributable to the controlling interest for 20X8?

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Business

Loki

Today, 08:47

On January 1, 20X8, Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash. At that date, Stamp reported common stock outstanding of $200,000 and retained earnings of $100,000, and the fair value of the noncontrolling interest was $70,000. The book values and fair values of Stamp's assets and liabilities were equal, except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life. Stamp reported the following data for 20X8 and 20X9: Stamp Corporation Year Net Income Comprehensive Income Dividends Paid 20X8 $ 25,000 $ 30,000 $ 5,000 20X9 35,000 45,000 10,000 Package reported net income of $100,000 and paid dividends of $30,000 for both the years. Based on the preceding information, what is the amount of comprehensive income attributable to the controlling interest for 20X8?

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Sage · Answer 1

Comprehensive income attributable to the controlling interest for 20X8 is $119,000

Explanation:

Stamp Corporation

Year Net Income Comprehensive Income Dividends Paid 20X8 $ 25,000 $ 30,000 $ 5,000

20X9 $35,000 $45,000 $ 10,000

The amount of comprehensive income attributable to the controlling interest for 20X8;

Comprehensive income of Stamp Corporation = $30,000

Less: Annual amortization of intangible assets acquired on acquisition (50000/8) = $6,250

Comprehensive income of Stamp Corporation after adjustment = $23,750

Income attributable to controlling interest = 80% * $23,750 = $19,000

Net income of Package Company = $100,000

Comprehensive income attributable to the controlling interest = Income attributable to controlling interest + Net income of Package Company

= $19,000 + $100,000

= $119,000