If on January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,712,000 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $428,000:
- How much of 2021 consolidated net income should be allocated to the noncontrolling interest is $428,000
- How much of 2021 consolidated net income should be allocated to the noncontrolling interest is $25,400
- What amount of 2021 dividends should be allocated to the noncontrolling interest is $10,000
- What amount of noncontrolling interest should appear in the owners’ equity section of Ackerman’s consolidated balance sheet at December 31, 2021 is $443,400
a) The Non controlling interest has to be recognized at fair value of the amount of $428,000 as on acquisition date
b) Income attributable to NCI of seidel company:
Net income earned bu siedel during the year 2021 $172,000
Less: Amortization of customer relationship asset ($45,000)
($180,000/4)
Net income earned after adjustment $127,000
($172,000-$45,000)
20% share attributable to NCI of seidel company $25,400
($127,000×20%)
c) Dividend allocation to Non controlling interest is 20% of the total dividend declared and paid
Dividend allocation =$50,000×20%
Dividend allocation =$10,000
d) Calculation of Non controlling interest as on December 31,2021:
Opening balance of NCI $428,000
Add: Income for year 2021 $25,400
Less: Dividend allocated ($10,000)
Closing balance of Non Controlling Interest $443,400
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