Reference no: EM132599160
Question - On Jan 1, 2018 Parent Co (P) acquired 70% of Sub Co (S) for $200,000. At the time of the acquisition S's Common Shares and Retained Earnings were $120,000 and $180,000 respectively. S's fair values approximated their book values on that date.
P accounts for S investment using the Equity Method in its stand books.
The following schedule summarizes the results of the operations recorded in the investment account, for the last two years .
Investment Income in P's Books
Dividend in P's Books Dec 31, 2018 16,000 1,600
Dec 31, 2019 33,000 3,300
Note that S's policy is to always declare a 10% dividends in its earnings.
Required -
1. Compute S's net income for 2018 and 2019.
2. Compute the amount of dividends declared by S in each year.
3. Compute the balance in the Non- Controlling Interest - NCI account as at December 31, 2019.
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