On January 1, 20X8, Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash. At that date, Stamp reported common stock outstanding of $200,000 and retained earnings of $100,000, and the fair value of the noncontrolling interest was $70,000. The book values and fair values of Stamp's assets and liabilities were equal, except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life. Stamp reported the following data for 20X8 and 20X9: Stamp Corporation Year Net Income Comprehensive Income Dividends Paid 20X8 $ 25,000 $ 30,000 $ 5,000 20X9 35,000 45,000 10,000 Package reported net income of $100,000 and paid dividends of $30,000 for both the years. Based on the preceding information, what is the amount of comprehensive income attributable to the controlling interest for 20X8?

Question

Business

Lucia Hampton

15 May, 13:57

On January 1, 20X8, Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash. At that date, Stamp reported common stock outstanding of $200,000 and retained earnings of $100,000, and the fair value of the noncontrolling interest was $70,000. The book values and fair values of Stamp's assets and liabilities were equal, except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life. Stamp reported the following data for 20X8 and 20X9: Stamp Corporation Year Net Income Comprehensive Income Dividends Paid 20X8 $ 25,000 $ 30,000 $ 5,000 20X9 35,000 45,000 10,000 Package reported net income of $100,000 and paid dividends of $30,000 for both the years. Based on the preceding information, what is the amount of comprehensive income attributable to the controlling interest for 20X8?

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Desirae Barry · Answer 1

Comprehensive income attributable to the controlling interest for 20X8 is $119,000

Explanation:

Stamp Corporation

Year Net Income Comprehensive Income Dividends Paid 20X8 $ 25,000 $ 30,000 $ 5,000

20X9 $35,000 $45,000 $ 10,000

The amount of comprehensive income attributable to the controlling interest for 20X8;

Comprehensive income of Stamp Corporation = $30,000

Less: Annual amortization of intangible assets acquired on acquisition (50000/8) = $6,250

Comprehensive income of Stamp Corporation after adjustment = $23,750

Income attributable to controlling interest = 80% * $23,750 = $19,000

Net income of Package Company = $100,000

Comprehensive income attributable to the controlling interest = Income attributable to controlling interest + Net income of Package Company

= $19,000 + $100,000

= $119,000