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8 February, 16:49

Purple Corporation acquired 75 percent of Socks Corporation's common stock on January 1, 20X8, for $435,000. At that date, Socks reported common stock outstanding of $300,000 and retained earnings of $200,000, and the fair value of the noncontrolling interest was $145,000. The book values and fair values of Socks's assets and liabilities were equal, except for other intangible assets, which had a fair value $80,000 more than book value and a 10-year remaining life. Purple and Socks reported the following data for 20X8 and 20X9: Socks Corporation ration Comprehensive Dividends Operating Income $120, 000 140,000 Dividends Paid $70,000 Ne Year 20xe 20x9 Income $40,000 60,000 Income Paid $15,000 30,000 $50, 000 65,000 70,000 Required: Compute consolidated comprehensive income for 20X8 and 20X9. 20x8 20x9

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  1. 8 February, 16:55
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    Answer and Explanation:

    The computation of the consolidated comprehensive income for the year 2008 and 2009 is shown below:

    Consolidated comprehensive income

    Particulars 20X8 20X9

    Purple Corporation

    Operating Income $120,000 $140,000

    Add: Net Income

    from Socks Corporation $40,000 $60,000

    Less: Amortization of differential

    ($80,000 : 10 Years) ($8,000) (8,000)

    Consolidated net income $152,000 $192,000

    Add: Comprehensive income

    reported by Socks Corporation $10,000 $5,000

    Consolidated

    comprehensive income $162,000 $197,000
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