On January 1 2012 Aspen Company acquired 80 percent of Birch

On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $504,000. Birch reported a $510,000 book value and the fair value of the noncontrolling interest was $126,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $160,000 when Cedar had a $164,000 book value and the 20 percent noncontrolling interest was valued at $40,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned to a trade name with a 30-year life. These companies report the following financial information. Investment income figures are not included.

Sales

2012

2013

2014

Aspen Co

515000

595000

740000

Birch Co

285000

398750

631000

Cedar Co

N/A

249800

258800

Expenses

Aspen Co

297500

442500

530000

Birch Co

237000

315000

557500

Cedar Co

N/A

233000

216000

Dividends declared

Aspen Co

20000

45000

55000

Birch Co

10000

15000

15000

Cedar Co

N/A

2000

6000

Assume that each of the following questions is independent:

a.

If all companies use the equity method for internal reporting purposes, what is the December 31, 2013, balance in Aspen\'s Investment in Birch Company account?

?Investment in Birch

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b.

What is the consolidated net income for this business combination for 2014?

Consolidated net income

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c.

What is the net income attributable to the noncontrolling interest in 2014?

NCI share of consolidated net income

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d.

Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following unrealized gross profits at the end of each year:

Date

Amount

12/31/12

11100

12/31/13

20700

12/31/14

28400

What is the realized income of Birch in 2013 and 2014, respectively?

Realized income

?????

Need help on all answers. Just could not figure it out on my own, used older problem for steps but some place along the process my answers got off and nothing was correct

Sales	2012	2013	2014
Aspen Co	515000	595000	740000
Birch Co	285000	398750	631000
Cedar Co	N/A	249800	258800
Expenses
Aspen Co	297500	442500	530000
Birch Co	237000	315000	557500
Cedar Co	N/A	233000	216000
Dividends declared
Aspen Co	20000	45000	55000
Birch Co	10000	15000	15000
Cedar Co	N/A	2000	6000

Solution

1 Consideration transferred by aspen 504000 Non controling interest fair value 126000 Birch bussiness fair value 630000 Book value -510000 Trade name 120000 Life 30 Annual amortization 4000 Consideration transferred by Cedar (By Birch) 160000 Non controling interest fair value 40000 Cedar\'s bussiness fair value 200000 Book value -164000 Excess to Trade name 36000 Life 30 Annual amortization 1200 Investment in brich 504000 Birch\'s reported net income- 2012 ($285000-$237000) 48000 Amortiz ation expense -4000 Accrual- based net income 44000 Birch’s percentage ownership             0.80 Equity accrual- 2012 35200 Dividen ds received 2012 -8000 Birch\'s reported net income- 2013 ($398750-$315000) 83750 Amortiz ation expense -4000 Net income from Cedar [80% × ($16800 – $1200) 12480 Accrual- based net income 92230 Birch’s percentage ownership 0.8 Equity accrual– 2013 73784 Dividen ds received from Birch 2013             (12,000) Investm ent in Birch 12- 31-13 592984 B. What is the consolidated net income for this business combination for 2014. Consolidated sales (total for the companies) 1629800 Consolidated expenses (total for the companies) -1303500 Total amortization expense (4,000 + 1200 ) -5200 Consolidated net income for 2014 321100 C. Noncontrolling interest in income of Cedar Revenues less expenses $42,800 Excess amortization -1200 Accrual-based income 41600 Noncontrolling interest percentage 20% Noncontrolling interest in income of Cedar 8320 8320 Noncontrolling interest in income of Birch Revenues less expenses 73500 Excess amortization -4000 Equity income accruing from Cedar Company (80% of 41600 accrual based income of cedar) 33280 Accrual-based income 102780 Noncontrolling interest percentage 20% Noncontrolling interest in income of Cedar $20,556 Total of NCI $28,876 d Accrual based income of 2013(as per a) 92230 Add: 2012 unrealised gross profit 11100 Less: 2013 unrealised gross profit -20700 2013 - realised income 82360 Accrual based income of 2014(as per c) 102780 Add: 2013 unrealised gross profit 20700 Less: 2014 unrealised gross profit -28400 2014 - realised income 95080