On January 1, 2019, Jannison Inc. acquired 90% of Techron Co. by paying $477,000 cash. There is no active trading market for Techron stock. Techron Co. reported a Common Stock account balance of $140,000 and Retained Earnings of $280,000 at that date. The fair value of Techron Co. was appraised at $530,000. The total annual amortization was $11,000 as a result of this transaction. The subsidiary earned $98,000 in 2019 and $126,000 in 2020 with dividend payments of $42,000 each year. Without regard for this investment, Jannison had income of $308,000 in 2019 and $364,000 in 2020. Prepare a proper presentation of consolidated net income and its allocation for 2019.

Answer is given below.

Explanation:

Economic Unit Concept  

                          20142015

Jannison Inc.308000364000

Techron Co.98000126000

Sub Total406000490000

Less : Amortization1100011000

Total Net Income395000479000

Non Controlling Interest  

= 10 % of Techron Co,  

(after deduction of amortization expense)  

= 10% (98000-11000)8700  

= 10% (126000-11000)  11500

Consolidated Net income386300467500

(after Noncontrolling interest allocation)  

Under Economic unit concept both business are taken as a single business unit, and accordingly incomes of both entities are clubbed to find income of business as whole

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23