On January 1,2014 Paki Inc Required:
Compute Controlling Interest Share of Consolidated Net Income and the Time

question 34

Essay

On January 1,2014 Paki Inc.bought 75% interest in Adam Corporation.At the time of purchase,Adam owned 80% of Baird Company.In all acquisitions,the book value equals the fair value,which equals the acquisition cost.Separate earnings (loss)(excluding investment income)for the three affiliates for 2014 are as follows:
$$\begin{array} { l c c } & \text { Separate } \\&\text { Earnings (Loss)}&\text { Dividends }\\\text { Paki Inc. } & \$ 400,000 & \$ 150,000 \\\text { Adam Corporation } & ( 50,000 ) & 90,000 \\\text { Baird Company } & 100,000 & 35,000\end{array}$$ Required:
Compute controlling interest share of consolidated net income and noncontrolling interest shares for Paki and affiliates for 2014.

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Definitions:

Apartment Building

A residential building containing multiple apartments for rent or lease.

Cost Recovery Deduction

A tax deduction that allows taxpayers to recover the cost of an asset over the time the asset is used, typically through depreciation.

Cost Recovery Deduction

A tax deduction that allows a taxpayer to recover the cost of property or assets over time through depreciation.

Warehouse

A large commercial building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc.