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Bay Clay: Business Combination VIEs Consolidation statements

Please treat the following - (a) (b) and (c) as separate units:

Bay Company owned 70% of the voting common stock of Clay Corporation. Clay Corporation owned 20% of Bay Company. For 2011, Bay Company and Clay Corporation reported net income (not including the investment) of $600,000 and $300,000 respectively. Bay Company and Clay paid dividends of $80,000 and $60,000 respectively. Prepare a schedule showing Bay Company's share of consolidated net income for 2011 using the treasury stock approach.

Kurton Inc. owned 90% of Luvyn Corporation's voting common stock. The consideration paid exceeded book value by $110,000. Of this amount, one half is attributable to a patent and is to be amortized over 5 years. Luvyn held 20% of Kurton's voting common stock which cost $28,000 more than fair value.
During the current year, Kurton reported operating income of $224,000 and dividend income from Luvyn of $37,800. At the same time, Luvyn reported operating income of $70,000 and dividend income from Kurton of $19,600. Prepare a schedule to show consolidated net income.

Wilkins Inc. owned 60% of Motumbo Company, During the current year, Motumbo reported net income of $280,000 but paid a total cash dividend of only $56,000. Assuming an income tax rate of 30%, what amount of Deferred Income Tax Liability arising this year must be recognized in the consolidated balance sheet?

Solution Summary

Your tutorial is in excel, attached. This illustrates the steps needed to compute the non-controlling interest, and the effect of dividends on the consolidated net income and deferred tax liability.