Patterson Company Acquired 90% of Starr Corporation on January 1

question 39

Essay

Patterson Company acquired 90% of Starr Corporation on January 1, 2011 for $2,250,000.Starr had net assets at that time with a fair value of $2,500,000.At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between Starr's net book value and net fair value.Assume the fair value exceeds the book value, and $20,000 pertains to the whole company.Separate from any earnings from Starr, Patterson reported net income in 2011 and 2012 of $550,000 and $575,000, respectively.Starr reported the following net income and dividend payments:
Required: Calculate the following:
• Investment in Starr shown on Patterson's ledger at December 31, 2011 and 2012.
• Investment in Starr shown on the consolidated statements at December 31, 2011 and 2012.
• Consolidated net income for 2011 and 2012.
• Noncontrolling interest balance on Patterson's ledger at December 31, 2011 and 2012.
• Noncontrolling interest balance on the consolidated statements at December 31, 2011 and 2012.

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Definitions:

Parent-Child Attachments

The deep emotional bond that develops between a child and their primary caregiver, which significantly affects the child's development and ability to form relationships.

Eccentricity

The quality of being unconventional or slightly strange in behavior or appearance.

Schizotypal

A personality disorder characterized by severe social anxiety, thought disorder, paranoid ideation, derealization, transient psychosis, and often unconventional beliefs.

Paranoid Personality

A mental health condition characterized by a pervasive distrust and suspicion of others' motives.