Question: Please show all the work and details for each question Prospect Co. acquired 70% of Stick Co. for $546,000 on January 1,2022 . Stick reported
Prospect Co. acquired 70% of Stick Co. for $546,000 on January 1,2022 . Stick reported a book value of stockholder's equity of $600,000 (including common stock of $240,000 and retained earnings of $360,000 ) on that date. Fair value of the 30% noncontrolling interest on the acquisition date was $225,000. On the acquisition date, a patent was undervalued by $75,000 (6-year remaining life) and a equipment was overvalued by $32,000 (8-year remaining life). Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. In 2022 , Stick earned net income of $340,000 and paid dividends of $50,000. Requirements: a. Calculate the goodwill that is assigned to controlling (CI) and noncontrolling interest (NCl). Answer: To Cl : : To NCl : b. Calculate the investment related income that the parent company would report for 2022 using each of the three methods (1) equity method; (2) initial value method; (3) partial equity method. Answer: (1): (2): (3) : c. How much net income of Stick was attributable to the noncontrolling interest in 2022 under the equity method
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
