Final answer:
The controlling interest share of consolidated net income for 2013 is calculated by adding Paglia Corporation's net income ($200,000) to its share of Aburn's and Badley's net incomes, which have been adjusted for ownership percentages, resulting in a consolidated net income of $324,800.
Step-by-step explanation:
The question deals with calculating the controlling interest share of consolidated net income for a group of corporations that have ownership stakes in each other. To determine the consolidated net income for 2013 for Paglia Corporation, which owns 80% of Aburn Corporation, and Aburn Corporation, which in turn owns 70% of Badley Corporation, we need to combine the separate net incomes and adjust for the ownership percentages. As all investments were made at book value and fair value, there are no complicated adjustments to be made for cost differences. The controlling interest is simply the parent company's net income plus its share of the subsidiaries' net incomes, which are as follows:
- Paglia Corporation's net income: $200,000
- Paglia's share of Aburn's net income: 80% of $100,000 = $80,000
- Aburn's share of Badley's net income: 70% of $80,000 = $56,000
- Paglia's indirect share of Badley's net income through Aburn: 80% of $56,000 = $44,800
Adding these amounts together, the controlling interest share of consolidated net income for 2013 is $200,000 + $80,000 + $44,800 = $324,800.