On January 1, 2010, Jannison Inc. acquired 90% of Techron Co. paying $477,000 cash. There is no active trading market for Techron stock. Techron Co. reported a common stock 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 2010 and $126,000 in 2011 with dividend payments of $42,000 each year. Without regard for this investment, Jannison had income of $308,000 in 2010 and $364,000 in 2011. Use the economic unit concept to account for this acquisition. Prepare a proper presentation of consolidated net income for 2010.
Your tutorial provides a schedule and instructional notes on how to do this.