## Answers

Consolidated Net income for the year | ||

Particulars | Amount | Explanation |

Sawyer Net Income | 175,000 | |

Depreciation on fair value of building | (7,500) | Calculation of depreciation as given |

amortization of Patent | (10,000) | Calculation of depreciation as given |

Sawyer relevant Net Income for consolidation | 157,500 | |

Profit related before the period of 30 June 2018 | 78,750 | This is pre acquisition profit which will directly deducted from Investment in subsidiary in balance sheet. It is assumed that income accrued equally throughout the year hence half income is considered pre and half is considered post acquisition |

Profit related after the period of 30 June 2018 | 78,750 | |

Profit of Parker Inc | 530,000 | |

Consolidated Net income for the year | 608,750 | |

Consolidated Net income allocated to Controlling interest (80%) | 487,000.0 | Consolidated net income is divided in the ratio of holding and minority interest share |

Consolidated Net income allocated to Non Controlling interest (20%) | 121,750.0 |

Statement showing balance of non controlling interest | ||

Particulars | Amount | Explanation |

Opening balance as given | 200,000 | |

Add profit during the year attributable | 121,750 | |

Less dividend received after the acquisition of shares | (6,000) | Total dividend paid by the subsidiary company $60,000. As it is paid throughout the year it is assumed that before acquisition of shares by holding company was already paid to other shareholders. After the acquisition total dividend payment is 30,000 while 20% of it will be attributable to minority shareholders which is $6000. |

Closing balance of Minority interest | 315,750 |

Balance of Patent Account at the end of the year | ||

Particulars | Amount | Explanation |

Fair value of Patent at the time of Acquisition | 120,000 | |

Depreciation | (10,000) | Patent is depreciated in 6 years starting from 1 July hence in current year only 6 months depreciation is considered. Which is 120000 / 6 / 2 |

Balance of Patent at the end of the year | 110,000 |

Particulars | Amount |

Fair Value of Building | 450,000 |

book Value of Building | 300,000 |

Fair Value differential of Building to be depreciated | 150,000 |

building is depreciated in 10 years starting from 1 July hence in current year only 6 months depreciation is considered. Which is 150000 / 6 / 2 | 7,500 |

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