Question

Paint corporation owns 82% of achille corporation and achille corporation owns 80% of badrack corporation. for the current year, the separate net incomes (excluding investment income) of paint, achille, and badrack are $120,000, $100,000, and $50,000, respectively. the cost of each investment was equal to the book value of the investment, which was also equal to the fair value.controlling interest share of consolidated net income for paint corporation and subsidiaries is:

a. $234,800.
b. $270,000.
c. $260,000.
d. $244,800.

Answer 1

To determine the controlling interest share of consolidated net income for Paint Corporation and subsidiaries, multiply the separate net income of Achille and Badrack by the ownership percentages of Paint and Achille respectively, and then add the separate net income of Paint to the calculated amounts.

Step-by-step explanation:

To determine the controlling interest share of consolidated net income for Paint Corporation and subsidiaries, we need to calculate the consolidated net income of Paint, Achille, and Badrack.

1. First, we multiply the separate net income of Achille ($100,000) by the ownership percentage of Paint (82%) to get the share of Achille's net income that Paint owns: $100,000 x 0.82 = $82,000.
2. Next, we multiply the separate net income of Badrack ($50,000) by the ownership percentage of Achille (80%) to get the share of Badrack's net income that Achille owns: $50,000 x 0.80 = $40,000.
3. Finally, we add the separate net income of Paint ($120,000) to the share of Achille's net income that Paint owns ($82,000) and the share of Badrack's net income that Achille owns ($40,000) to get the consolidated net income of Paint Corporation and subsidiaries: $120,000 + $82,000 + $40,000 = $242,000.

Therefore, the controlling interest share of consolidated net income for Paint Corporation and subsidiaries is $242,000.