Grant Company purchased 80% of Lincoln Company stock for $650,000. At the time of the purchase, Lincoln
Question:
Grant Company purchased 80% of Lincoln Company stock for $650,000. At the time of the purchase, Lincoln Company had a book value was $480,000 with the excess being caused by a patent being undervalued by $90,000 and the rest from goodwill.The patent has a five year life. Grant sold inventory last year to Lincoln for a profit of $10,000 which was in their inventory at the beginning of this year. Grant also sold inventory to Lincoln at a profit of $15,000 which is in the inventory of Lincoln at the end of the current year.The separate income reported by Grant was $250,000 and by Lincoln was $90,000.
A. Determine the consolidated income, the controlling interest share, and the non-controlling interest share.
B. Assume instead that Lincoln sold the inventory to Grant with $10,000 profit in Grant's beginning inventory and $15,000 profit in the ending inventory. Assume further that the same separate profits were reported. Determine the consolidated income, the controlling share, and the non-controlling share.
Expert Answer:
Answer Solution a Grant Lincoln Consolidated Reported profit 250000 90000 Less amortization of pat... View the full answer
