Thomas Inc. had the following stockholders' equity accounts as of January 1, 2018: Preferred stock - $90 par value, nonvoting and nonparticipating; 9% cumulative dividend$2,700,000 Common stock - $25 par value 5,600,000 Retained earnings 14,000,000 ??Kuried Co. acquired all of the voting common stock of Thomas on January 1, 2018, for $20,656,000. The preferred stock remained in the hands of outside parties and had a fair value of $3,060,000. A database valued at $656,000 was recognized and amortized over five years. During 2018, Thomas reported earning $630,000 in net income and paid $504,000 in total cash dividends. Kuried used the equity method to account for this investment.?What is the controlling interest share of Thomas' net income for the year ended December 31, 2018?
What will be an ideal response?
| Database | $ | 656,000 | |
| Amortization period in years | ÷ | 5 | |
| Annual amortization of database | $ | 131,200 | |
| Thomas net income (book) | $ | 630,000 | |
| Amortization of database | (131,200 | ) | |
| 498,800 | |||
| Preferred stock dividend (9% × $2,700,000) | (243,000 | ) | |
| Net income residual to common stockholders (100% to Kuried as controlling interest) | $ | (255,800 | ) |
Business
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