Parent Company P owns 80% of the outstanding shares of Subsidiary Company S. The following information is
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Question:
Parent Company P owns 80% of the outstanding shares of Subsidiary Company S. The following information is available for both companies:
Parent Company P:
- Net Income: $500,000
- Dividends Declared: $100,000
- Tax Rate: 30%
Subsidiary Company S:
- Net Income: $200,000
- Dividends Declared: $50,000
- Tax Rate: 25%
Additional Information:
- Non-controlling interest in Subsidiary Company S is valued at $200,000.
- Any excess acquisition cost is attributed to goodwill.
- Deferred tax liability of $50,000 exists on Subsidiary Company S's net assets.
Calculate the consolidated net income and the consolidated retained earnings, considering non-controlling interest and deferred tax.
Related Book For
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
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