[Anonymous]

Rooney Co acquired 70% of the equity share capital of Marek Co, its only subsidiary, on January 1, 20X6. The fair value of the non-controlling interest in Marek Co at acquisition was $1·1m. At that date the fair values of Marek Co’s net assets were equal to their carrying amounts, except for a building which had a fair value of $1·5m above its carrying amount and 30 years remaining useful life.

During the year to December 31, 20X6, Marek Co sold goods to Rooney Co, giving rise to an unrealized profit in inventory of $550,000 at the year-end. Marek Co’s profit after tax for the year ended December 31, 20X6 was $3·2m.

What amount will be presented as the non-controlling interest in the consolidated statement of financial position of Rooney Co as at December 31, 20X6?

$2,060,000

$1,495,000

$1,880,000

$1,895,000

[Anonymous]

Pride, Inc. owns 80% of Simba, Inc.'s outstanding common stock. Simba, in turn, owns 10% of Pride's outstanding common stock. What percentage of the common stock cash dividends declared by the individual companies should be reported as dividends declared in the consolidated financial statements?

Dividends declared by Pride Dividends declared by Simba
90% 0%
0% 0%
90% 20%
100% 0%

[watermelon]

For the first one, I found the answer somewhere else but I was not sure if the Depreciation part is right. Please let me know otherwise.
+ 1,100 FV of NCI at acquisition
+ (3,200 Profit for year – 50 Depreciation on FVA (1·5m/30) – 550 Unrealised profit) * 0.3
=1,880

Second one was discussed in the forum before:
https://www.another71.com/cpa-exam-forum/topic/consolidations/

[Anonymous]

The answer to the first one is correct.
I just want to know the reason for subtracting unrealized profit.

For the second question ,I am still not very much confident with the reason.

[Author]

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