Question 4 Accounting when there is noncontrolling interest. ( 10 points) On January 1 ,...
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Question 4 Accounting when there is noncontrolling interest. ( 10 points) On January 1 , Year 1 , Pop bought 90% of the shares of Sop for $200 million. At the time, the fair value of the 10% noncontrolling interest was $20 million. The equity of Sop on the date of acquisition was $170 million. Its common stock =$10 million and retained earnings =$160 million. All assets and liabilities had fair value equal to book value, except Sop owned a patent, with zero book value, and a fair value of $40 million. It has five years of remaining life. During year 1, Sop reported revenues of $50 million and expenses of $35 million. It declared dividends of $10 million. Pop had net income from its own operations (ignoring its interest in Sop) of $100 million. A. As of the date of acquisition, what consolidation entry or entries are needed? Show your work. (6 points) (Hint - these would be entries S and A in the book) B. At the end of the year, what is the amount of income that is allocable to the noncontrolling interest? (4 points)
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