Balance Sheet

7.   Assume that P company purchases 60% of the outstanding shares of S company for $300 cash and that all of S company’s assets and liabilities are carried on S’s books at market value.  Below find the balance sheets for the two companies, immediately before the purchase occurs.

                                                            P Company                 S Company

      Assets                                                $3,000                           $2,000                             

      Liabilities                                          $1,000                           $1,500

      Shareholders’ Equity                        $2,000                           $   500

7a. Compute non-controlling interest that will appear on P Company’s consolidated balance sheet immediately after the merger.  Show your computations?  (5 points)

Non-controlling interest:

Computations:

      In the quarter following the purchase, P company’s consolidated income statement ends in the following way:

                        Net Income:                                                                                $200

                          Net Income Attributable to noncontrolling interests:                  +10

                        Net Income Attributable to P Company:                                    $210

7b. What was the total profit or loss of S company for the quarter?  Show your computations?  (5 points)

Circle One:      Profit      Loss Amount:

Computations:

7c. How much of S’s income is included in the $210 “Net Income Attributable to P Company”?  Show your computations.  (5 points)

Circle One:      Profit      Loss Amount:

Computations: