Computations for sale of an interest
Pit Corporation acquired a 90 percent interest in Sad on July 1, 2012, for $675,000. The stockholders’ equity of Sad at December 31, 2011, was as follows (in thousands):
|
Capital stock |
$500 |
|
Retained earnings |
200 |
|
Total |
$700 |
During 2012 and 2013, Sad reported income and declared dividends as follows:
|
2012 |
2013 |
|
|
Net income |
$100,000 |
$80,000 |
|
Dividends (December) |
50,000 |
30,000 |
On July 1, 2013, Pit sold a 10 percent interest (or one ninth of its investment) in Sad for $85,000.
REQUIRED
1. Determine Pit’s investment income for 2012 and 2013, and its investment balance on December 31, 2012 and 2013.
2. Determine noncontrolling interest share for 2012 and 2013, and the total of noncontrolling interest on December 31, 2012 and 2013.