Question

page corporation acquired a 60% interest in ace corporation at a price $40,000 in excess of book value and fair value on january 1, 2013. on the same date, ace acquired a 70% interest in bader corporation at a price $30,000 in excess of book value and fair value. the excess purchase cost paid by page and ace was attributed to goodwill. separate net incomes (excluding investment income) for the three affiliates for 2013 are as follows: page, $500,000, ace, $300,000, and bader, $400, 's controlling interest share of consolidated net income for 2013 is:______

Answer 1

Page Corporation's controlling interest share of consolidated net income for 2013 is $597,500.

Step-by-step explanation:

Page Corporation acquired a 60% interest in Ace Corporation at a price $40,000 in excess of book value and fair value on January 1, 2013. Simultaneously, Ace acquired a 70% interest in Bader Corporation at a price $30,000 in excess of book value and fair value.

The excess purchase cost paid by both Page and Ace was attributed to goodwill. To calculate Page's controlling interest share of consolidated net income for 2013, we first find the consolidated net income, considering the ownership percentages and individual net incomes of Page, Ace, and Bader.

`\[ Consolidated\:Net\:Income = (Page\:Share * Page's\:Net\:Income) + (Ace\:Share * Ace's\:Net\:Income) + (Bader\:Share * Bader's\:Net\:Income) \]`

`\[ Consolidated\:Net\:Income = (0.60 * $500,000) + (0.60 * 0.70 * $300,000) + (0.60 * 0.30 * $400,000) \]`

`\[ Consolidated\:Net\:Income = $300,000 + $126,000 + $72,000 \]`

`\[ Consolidated\:Net\:Income = $498,000 \]`

Now, to find Page's controlling interest share:

`\[ Page's\:Controlling\:Interest = Page\:Share * Consolidated\:Net\:Income \]`

`\[ Page's\:Controlling\:Interest = 0.60 * $498,000 \]`

`\[ Page's\:Controlling\:Interest = $298,800 \]`

Adding the investment income from Ace and Bader:

`\[ Page's\:Controlling\:Interest = $298,800 + (0.60 * 0.70 * $30,000) + (0.60 * 0.30 * $40,000) \]`

`\[ Page's\:Controlling\:Interest = $298,800 + $12,600 + $7,200 \]`

`\[ Page's\:Controlling\:Interest = $318,600 \]`

Therefore, Page Corporation's controlling interest share of consolidated net income for 2013 is $318,600.