On January 1,2011,Parton Corporation Acquired an 80% Interest in Sandra

question 32

Essay

On January 1,2011,Parton Corporation acquired an 80% interest in Sandra Corporation for $184,000.Sandra's net assets on this date had a book value of $160,000 and a fair value of $210,000.The excess of fair value over book value at acquisition was attributable to $20,000 of understated plant assets with a remaining useful life of five years from January 1,2011,and $30,000 to an understated patent with a remaining economic life of six years from January 1,2011.Separate net incomes (excluding investment income)of Parton and Sandra for 2011 were $300,000 and $50,000,respectively.
Required:
1.Compute goodwill at January 1,2011 under the parent company theory and the entity theory.
2.Determine consolidated net income and noncontrolling interest share for 2011 under the parent company theory and the entity theory.

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