Willy Wagtail Company has $4,000,000 of 12% bonds outstanding on December 31, 2004, with an unamortized premium of $120,000. These bonds pay interest semiannually on January 1 and July 1 and mature on January 1, 2010. Straight-line amortization is used.

Garden Inc., an 80%-owned subsidiary of Willy Wagtail, buys $1,000,000 par value of Willy Wagtail’s outstanding bonds in the market for $980,000. There is only one issue of outstanding bonds of the affiliated companies and they have consolidated financial statements.

For the year 2005, Willy Wagtail has income from its separate operations (excluding investment income) of $4,500,000 and Garden reports net income of $600,000.

Required: (a) Determine the following:
1.	Noncontrolling interest expense for 2005.
2.	Consolidated net income for Willy Wagtail Company and subsidiary for 2005.

(b):

Discuss critically the Conditions for a parent entity to be exempt from consolidation [IFRS 10.4]

Answer rating: 100% (QA)

1The noncontrolling interest expense for 2005 is 120000 2The consolidated net income for Willy Wagtail Company and subsidiary for 2005 is 4380000 bThe ... View the full answer