Boulder, Inc., obtained 90 percent of Rock Corporation on January 1, 2016. Annual amortization of $24,300 is applicable on the allocations of Rock's acquisition-date business fair value. On January 1, 2017, Rock acquired 75 percent of Stone Company's voting stock. Excess business fair-value amortization on this second acquisition amounted to $11,000 per year. For 2018, each of the three companies reported the following information accumulated by its separate accounting system. Separate operating income figures do not include any investment or dividend income. Separate Operating Income Dividends Declared Boulder $336,500 $124,000 Rock 116,500 30,000 Stone 180,000 41,000 What is consolidated net income for 2018?

A. Consolidated net income $597,700

B. Noncontrolling interest in Stone's income $42,250

Noncontrolling interest in Rock's net income $21,895

Total net income attributable to noncontrolling interests $64,145

Reconciliation:

Controlling interest in consolidated net income$533,555

Net income attributable to noncontrolling interest $64,145

Consolidated net income$597,700

Explanation:

a.

Boulder's operating income$336,500

Rock's operating income $116,500

Stone's operating income $180,000

Amortization expense-Boulder's investment in Rock ($24,300)

Amortization expense-Rock's investment in Stone ($11,000)

Consolidated net income $597,700

b. Stone's operating income$180,000

Amortization expense (on Rock's investment) (11,000)

Stone's accrual-based net income$169,000

Outside ownership 25%

Noncontrolling interest in Stone's income $42,250

Rock's operating income $116,500

Amortization expense (on Boulder's investment) ($24,300)

Equity accrual from ownership of Stone ($169,000 * 75%) $126,750

Rock's accrual-based net income$218,950

Outside ownership 10%

Noncontrolling interest in Rock's net income $21,895

Total net income attributable to noncontrolling interests $64,145

($42,250 + $21,895)

Reconciliation:

Boulder's operating income $336,500

Boulder's share of Rock's operating income (90% * $116,500) $104,850

Boulder's share of Stone's operating income (90% * 75% * $180,000) $121,500

Boulder's share of Rock's excess amortization (90% * $24,300) ($21,870)

Boulder's share of Stone's excess amortization (90% * 75% * $11,000) ($7,425)

Controlling interest in consolidated net income$533,555

Net income attributable to noncontrolling interest $64,145

Consolidated net income$597,700

Answer: $597,700

Explanation:

To find the Consolidated Net Income, one must sum up all the Separate Operating Incomes and then account for Amortization expense by deducting it.

In this scenario it will look like this,

= Operating Income of Boulder Inc + Operating Income of Rock Corporation + Operating Income of Stone Company - Amortization expense (Boulder's investment in Rock Corporation) - Amortization Expense (Rock's investment in Stone Company)

= 336,500 + 116,500 + 180,000 - 24,300 - 11,000

= $597,700

The Consolidated Net Income for the year 2018 was $597,700.