Ambrose Corporation owns 80 percent of Kroop Company's common stock, acquired at underlying book value on January
Question:
Ambrose Corporation owns 80 percent of Kroop Company's common stock, acquired at underlying book value on January 1, 20X4. At the acquisition date, the book values and fair values of Kroop's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Kroop. The income statements for Ambrose and Kroop for 20X4 include the following amounts:
Ambrose
Corporation Kroop
Company Sales$546,000 $156,000
Dividend Income 8,800
Total Income$554,800 $156,000
Less: Cost of Goods Sold$371,000 $67,000
Depreciation Expense 28,000 16,000
Other Expenses 55,000 19,000
Total Expenses$454,000 $102,000
Net Income$100,800 $54,000
Ambrose uses the cost method in accounting for its ownership of Kroop. Kroop paid dividends of $11,000 in 20X4.
Required:
.AWhat amount would Ambrose report in its income statement as income from its investment in Kroop if Ambrose used equity-method accounting?
b.What amount of income should be assigned to noncontrolling interest in the consolidated income statement for 20X4?
c.What amount should Ambrose report as consolidated net income for 20X4?
Expert Answer:
To answer the questions we need to apply equitymethod accounting and understand the consolidation pr... View the full answer
