On January 1,20X5,PX's Shareholders' Equity Was as Follows

question 13

Essay

On January 1,20X5,PX's shareholders' equity was as follows:
GL held 90% of the 8,000 outstanding shares of PX on January 1,20X5,and its investment in PX account had a balance of $252,000 on that date.GL accounts for its investment in its subsidiary by the equity method using the entity approach.At the time of acquisition of PX,the only fair value increment arising was due to the patent,which had a remaining life of 5 years on January 1,20X5.
The following transactions took place subsequent to January 1,20X5:
• During 20X5,PX reported a net income of $80,000 (earned equally throughout the year).
• PX declared dividends of $10,000 on September 1.
• During 20X6,PX reported a net income of $76,000 and paid dividends of $16,000 on December 1.
• During 20X6,PX sold equipment to GL for $140,000.At the time,the net book value of the equipment to PX was $100,000.There are four years remaining on the useful life of the equipment.Both companies record a full year of depreciation expense in the year of the purchase and no depreciation in the year of a sale.
Required:
Assuming that no value is assigned to patents on the separate-entity financial statements for GL and PX,calculate patents on the consolidated balance sheet at December 31,20X6.
Calculate the allocation of the consolidated net income to the non-controlling interest for each of 20X5 and 20X6.

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Definitions:

Antique Car Collection

The hobby or business of collecting cars from earlier periods, typically those that possess historical value or unique characteristics.

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A secure container, typically held within a bank vault, used to store valuable possessions or documents.

Codicil

A supplemental document that modifies, explains, or revokes a will or part of a will.

Bequest

Personal property left in a will. Also called legacy.