McLaughlin, Inc. acquires 70 percent of Ellis Corporation on September 1, 2019, and an additional 10 percent on November 1, 2020. Annual amortization of $12,000 relates to the first acquisition. Ellis reports the following figures for 2020: Revenues$500,000 Expenses 350,000 Retained earnings, 1/1/20 3,500,000 Dividends paid 40,000 Common stock 400,000 ??Without regard for this investment, McLaughlin earns $480,000 in net income ($840,000 revenues less $360,000 expenses; incurred evenly through the year) during 2020.?Required:?Prepare a schedule of consolidated net income and apportionment to noncontrolling and controlling interests for 2020.
What will be an ideal response?
| Revenues ($840,000 + 500,000) | $ | 1,340,000 | |||||
| Expenses ($360,000 + 350,000 + amort.12,000) | * | 722,000 | |||||
| Consolidated net income | $ | 618,000 | |||||
| To noncontrolling interest | ** | (39,100 | ) | ||||
| To controlling interest | $ | 578,900 | |||||
| Noncontrolling interest: | ** | ||||||
| Revenues | $ | 500,000 | |||||
| Expenses ($350,000 + amort.12,000) | 362,000 | ||||||
| Net income | $ | 138,000 | |||||
| 30% x 10/12 (for months) × 138,000 | $ | 34,500 | |||||
| 20% x 2/12 (for months) × 138,000 | 4,600 | $ | 39,100 | ||||
? | |||||||
| *Amortization of $12,000 = original $8,400 for 70% grossed up to the 100% amount of $12,000. | |||||||
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