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How much would the adjustment to investment income be

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Reference no: EM133109091

Question - On 1/1/22 Big Co acquired 70% of Little Co voting stock for $350,000; the fair value of the non-controlling interest was $150,000 on that date.

Little's book value on that date was $350,000.  Little had the following misvalued/unreported assets and liabilities:

Land: Undervalued by $7,000

Inventory, FIFO basis: Undervalued by $15,000

Bonds payable, 5 year life: Undervalued by $10,000

In 2022 Little reported earnings of $50,000 and paid dividends of $10,000

Required -

1) How much goodwill would be recorded in the consolidation entries?

2) In the EQUITY METHOD ENTRIES, how much would the adjustment to investment income be for the amortization of the inventory differential?

3) In the ELIMINATION ENTRIES, how much would be the amortization associated with the inventory differential?

4) What is the "Income to the NC Interest" in 2022?

Reference no: EM133109091

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