1 Calculate the balance of NCI at December 31 2013 Provide d

1. Calculate the balance of NCI at December 31, 2013. Provide detail calculations.

Peter Company purchased 95% of the common stock of Paul Company on May 1, 2013, for a cash payment of $515,000. December 31, 2013, trial balances for Peter and Paul were Peter Paul BALANCE SHEET December 31, 2013 December 31, 2013 Current Assets Investment in Paul Property and Equipment 352,600 549,845 1,334,000 2,236,445 179,200 562,000 741,200 Total Assets Account and Notes Payable Dividend Payable Common Stock ($ 10 par) Other Contributed Capital Treasury Stock at Cost, 500 shares R/E January 1, 2013 Net Income Dividend Declared 270,240 124,000 60,000 200,000 90,000 (32,000) 209,200 150,000 60,000 741,200 1,000,000 364,000 315,360 286,845 0 2,236,445 Total Liabilities+Equity INCOME STATEMENT Peter Paul 2013 2013 Sales Cost of Goods Sold Other Expenses Equity in Subsidiary Income Net Income 1,940,000 976,000 (1,261,000) (584,000) (484,000) 242,000) 91,845 286,845 150,000 Paul Company declared a $60,000 cash dividend on December 20, 2013, payable on January 10, 2014, to stockholders of record on December 31, 2013. Peter Company recognized the dividend on its declaration date. Any difference between book value and the value implied by the purchase price relates to subsidiary equipment with 5-year remaining life, included in property and equipment. Revenues and expenses are distributed evenly through the year

Solution

Non Controlling Interest (NCI)

Step 1	Date of Aquisition	5/1/2013
Step 2	Pattern of Holding
	Peter	95%
	Non Controlling Interest	5%
		100%
Step 3	Analysis of Profits
1	Retained Earnings
	01/01/2013	$209,200.00	This is Pre aquisition profit
2	Income for current year	$150,000.00
	Less: Dividend Declared	-$60,000.00
	Net Income for current year	$90,000.00
	Less: Pre aquisition profit
	from 1st jan to 30th Apr,2013	-$30,000.00
	Post aquisition profit	$60,000.00
Step 4	Apportionment of profits
	Particulars	Pre aquisition profit	Post aquisition profit
1	Retained Earnings	$209,200.00	$0.00
	(from step 3)
2	Net Income of Current year	$30,000.00	$60,000.00
	(from step 3)
	Total	$239,200.00	$60,000.00
	Peter (95%)	$227,240.00	$57,000.00
	Non Controlling Interest (5%)	$11,960.00	$3,000.00
Step 5	Non Controlling Interest (NCI)
	Share in Common Stock	$10,000.00
	Other Contributed Capital	$90,000.00
	Less: Treasury stock	-$25.00
	Share in dividend	$3,000.00
	Pre aquisition profit	$11,960.00	From step 4
	Post aquisition profit	$3,000.00	From step 4
	Total	$117,935.00