Computations for downstream and upstream sales of land
Sir Corporation is a 90 percent owned subsidiary of Pit Corporation, acquired several years ago at book value equal to fair value. For 2011 and 2012, Pit and Sir report the following:
|
2011 |
2012 |
|
|
Pit’s separate income (excludes income from Sir) |
$300,000 |
$400,000 |
|
Sir’s Net Income |
80,000 |
60,000 |
The only intercompany transaction between Pit and Sir during 2011 and 2012 was the January 1, 2011, sale of land. The land had a book value of $20,000 and was sold intercompany for $30,000, its appraised value at the time of sale.
1. Assume that the land was sold by Pit to Sir and that Sir still owns the land at December 31, 2012.
a Calculate controlling share of consolidated net income for 2011 and 2012.
b Calculate noncontrolling interest share for 2011 and 2012.
2. Assume that the land was sold by Sir to Pit and Pit still holds the land at December 31, 2012.
a Calculate controlling share of consolidated net income for 2011 and 2012.
b Calculate noncontrolling interest share for 2011 and 2012.