Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2019. During 2019, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of fair value allocations totaled $60,000 in 2019. Not including its investment in Harbor, Femur Co. had its own revenues of $4,500,000 and expenses of $3,000,000 for the year 2019.

The noncontrolling interest's share of the earnings of Harbor Corp. for 2019 is calculated to be:

a. What amount of consolidated net income for 2019 should be allocated to Femur's controlling interest in Harbor?

b. What amount would Femur Co. report as consolidated net income for 2019?

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27 April, 19:23

Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2019. During 2019, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of fair value allocations totaled $60,000 in 2019. Not including its investment in Harbor, Femur Co. had its own revenues of $4,500,000 and expenses of $3,000,000 for the year 2019.

The noncontrolling interest's share of the earnings of Harbor Corp. for 2019 is calculated to be:

a. What amount of consolidated net income for 2019 should be allocated to Femur's controlling interest in Harbor?

b. What amount would Femur Co. report as consolidated net income for 2019?

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Answers (1)

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Karter Butler · Answer 1

The noncontrolling interest's share of the earnings of Harbor Corp. for 2019

= ($2,500,000 - $2,000,000 - $60,000) * 0.3 = 440,000*0.3 = $132,000

Amount of consolidated net income for 2019 should be allocated to Femur's controlling interest in Harbor

= $440,000 - $132,000 = $308,000

Amount Femur Co. would report as consolidated net income for 2019:

= $ (4,500,000-3,000,000) + $308,000 = $1,500,000 + $308,000 = $1,808,000