Summit owns a 90 percent majority voting interest in Treeline. In turn, Treeline owns a 70 percent majority voting interest in Basecamp. In the current year, each firm reports the following income and dividends. Operating income figures do not include any investment or dividend income.

In addition, in computing its income on a full accrual basis, Treeline’s acquisition of Basecamp necessitates excess acquisition-date fair value over book value amortizations of $25,000 per year. Similarly, Summit’s acquisition of Treeline requires $20,000 of excess fair-value amortizations.

Required

Prepare an Excel spreadsheet that computes the following:

1. Treeline’s income including its equity in Basecamp earnings.

2. Summit’s income including its equity in Treeline’s total earnings.

3. Total entity net income for the three companies.

4. Total noncontrolling interest in the total entity’s net income.

5. Difference between these elements:

• Summit’s net income.

• Total entity net income for the three companies less noncontrolling interest in the total entity’s net income.

Transcribed Image Text:

Operating Income Dividends Paid Summit Treeline Basecamp $345,000 280,000 175,000 $150,000 100,000 40,000