Ryan Company acquired 70% of Garcia Company for $475,000 on January 1, 2021. Garcia reported common stock of $250,000 and retained earnings of $180,000 on that date. Equipment was undervalued by $12,000 and buildings were undervalued by $50,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. According to an annual review, goodwill has not been impaired. Garcia earns income and pays dividends as follows: 2021 2022 Net Income $ Dividends 120,000 49,000 $ 147,000 52,000 Assume the initial value method is applied. Compute the noncontrolling interest in Garcia at December 31, 2022.
Ryan Company acquired 70% of Garcia Company for $475,000 on January 1, 2021. Garcia reported common stock of $250,000 and retained earnings of $180,000 on that date. Equipment was undervalued by $12,000 and buildings were undervalued by $50,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. According to an annual review, goodwill has not been impaired. Garcia earns income and pays dividends as follows: 2021 2022 Net Income $ Dividends 120,000 49,000 $ 147,000 52,000 Assume the initial value method is applied. Compute the noncontrolling interest in Garcia at December 31, 2022.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Ryan
Company acquired 70% of Garcia Company for $475,000 on January 1, 2021. Garcia reported common stock of $250,000 and retained earnings of $180,000 on that date. Equipment was undervalued by $12,000 and buildings were undervalued
by $50,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. According to an annual review, goodwill has not been impaired.
Garcia earns income and pays dividends as follows:
2021
Net income $
Dividends
120,000
49,000
2022
S
147,000
52,000
Assume the initial value method is applied.
Compute the noncontrolling interest in Garcia at December 31, 2022.
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