EXCEL CASE: INDIRECT SUBSIDIARY CONTROL

Highpoint owns a 95 percent majority voting interest in Middlebury. In turn, Middlebury owns an 80 percent majority voting interest in Lowton. In the current year, each firm reports the following income and dividends. Separate Company income figures do not include any investment or dividend income.

	Separate Company Income	Dividends Declared
Highpoint	$425,000	$200,000
Middlebury	340,000	150,000
Lowton	250,000	75,000

In addition, in computing its income on a full accrual basis, Middleburys acquisition of Lowton necessitates excess acquisition-date fair value over book value amortizations of $25,000 per year. Similarly, Highpoints acquisition of Middlebury requires $20,000 of excess fair-value amortizations.

Required

Prepare an Excel spreadsheet that computes the following:

1. Middleburys net income including its equity in Lowton earnings.

2. Highpoints net income including its equity in Middleburys total earnings.

3. Total entity net income for the three companies.

4. Net income attributable to the noncontrolling interests.

5. Difference between these elements:

   • Highpoints net income.

   • Total entity net income for the three companies less net income attributable to the noncontrolling interests of the total entity.

     (Hint: The difference between these two amounts should be zero.)