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Ambrose Corporation owns 80 percent of Kroop Company's common stock, acquired at underlying book value on January 1, 20X4.
Ambrose Corporation owns 80 percent of Kroop Company's common stock, acquired at underlying book value on January 1, 20X4. At the acquisition date, the book values and fair values of Kroop's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Kroop. The income statements for Ambrose and Kroop for 20X4 include the following amounts:
Ambrose
CorporationKroop
Company Sales$546,000 $156,000 Dividend Income 8,800 Total Income$554,800 $156,000 Less: Cost of Goods Sold$371,000 $67,000 Depreciation Expense 28,000 16,000 Other Expenses 55,000 19,000 Total Expenses$454,000 $102,000 Net Income$100,800 $54,000
Ambrose uses the cost method in accounting for its ownership of Kroop. Kroop paid dividends of $11,000 in 20X4.
Required:a.What amount would Ambrose report in its income statement as income from its investment in Kroop if Ambrose used equity-method accounting?
b.What amount of income should be assigned to noncontrolling interest in the consolidated income statement for 20X4?
c.What amount should Ambrose report as consolidated net income for 20X4?
