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  3. parent company p owns 80% of the outstanding share

Parent Company P owns 80% of the outstanding shares of Subsidiary Company S. The following...

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Accounting

Parent Company P owns 80% of the outstanding shares of Subsidiary Company S. The following information is available for both companies:

Parent Company P:

  • Net Income: $500,000
  • Dividends Declared: $100,000
  • Tax Rate: 30%

Subsidiary Company S:

  • Net Income: $200,000
  • Dividends Declared: $50,000
  • Tax Rate: 25%

Additional Information:

  • Non-controlling interest in Subsidiary Company S is valued at $200,000.
  • Any excess acquisition cost is attributed to goodwill.
  • Deferred tax liability of $50,000 exists on Subsidiary Company S's net assets.

Calculate the consolidated net income and the consolidated retained earnings, considering non-controlling interest and deferred tax.

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