In January 1, 2021, Harley Company bought 15% of Buttercup Company. Harley paid $200,000 for these shares,
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Question:
In January 1, 2021, Harley Company bought 15% of Buttercup Company. Harley paid $200,000 for these shares, an amount that exactly equaled the proportionate book value of Buttercup. On January 1, 2022, Buttercup acquired 80% ownership of Harley. The following data are available concerning Buttercup’s acquisition of Harley:
Consideration transferred for 80% interest, January 1, 2022: $1,000,000
Harley’s reported book value, January 1, 2022: 1,200,000
Excess fair value over book value (assigned to trademarks) is amortized over 20 years. The initial value method is used by both companies. The following information is available regarding Harley and Buttercup:
Harley Company | Buttercup Company | ||||||||
Year | Reported Separate Income | Dividend Income | Dividends Declared | Reported Separate Income | Dividend Income | Dividends Declared | |||
2021 | $50,000 | $7,500 | $12,000 | $150,000 | $0 | $50,000 | |||
2022 | 60,000 | 10,500 | 16,000 | 180,000 | 12,800 | 70,000 | |||
Compute the net income attributable to the noncontrolling interest for 2022.
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