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    Yustika Adiningsih, AKL 1a 2021 E3-4

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    1. The document discusses the correction of consolidated net income for Liong Corporation after acquiring an 80% interest in Taro Corporation. It provides information on overvalued and undervalued assets and the net incomes of both companies. 2. The goodwill that should appear on the consolidated balance sheet is $412,500, calculated from the implied fair value of Taro versus its book value and an equipment undervaluation. 3. The consolidated net income for 2016 is calculated as $1,702,500 based on adjusting Liong's reported net income for amortization and adding the controlling and noncontrolling shares of income.

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    Yustika Adiningsih, AKL 1a 2021 E3-4

    Uploaded by

    yes i
    2K views1 page
    1. The document discusses the correction of consolidated net income for Liong Corporation after acquiring an 80% interest in Taro Corporation. It provides information on overvalued and undervalued assets and the net incomes of both companies. 2. The goodwill that should appear on the consolidated balance sheet is $412,500, calculated from the implied fair value of Taro versus its book value and an equipment undervaluation. 3. The consolidated net income for 2016 is calculated as $1,702,500 based on adjusting Liong's reported net income for amortization and adding the controlling and noncontrolling shares of income.

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    Yustika Adiningsih, AKL 1a 2021; E3-4

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    1. The document discusses the correction of consolidated net income for Liong Corporation after acquiring an 80% interest in Taro Corporation. It provides information on overvalued and undervalued assets and the net incomes of both companies. 2. The goodwill that should appear on the consolidated balance sheet is $412,500, calculated from the implied fair value of Taro versus its book value and an equipment undervaluation. 3. The consolidated net income for 2016 is calculated as $1,702,500 based on adjusting Liong's reported net income for amortization and adding the controlling and noncontrolling shares of income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views1 page

    Yustika Adiningsih, AKL 1a 2021 E3-4

    Uploaded by

    yes i
    1. The document discusses the correction of consolidated net income for Liong Corporation after acquiring an 80% interest in Taro Corporation. It provides information on overvalued and undervalued assets and the net incomes of both companies. 2. The goodwill that should appear on the consolidated balance sheet is $412,500, calculated from the implied fair value of Taro versus its book value and an equipment undervaluation. 3. The consolidated net income for 2016 is calculated as $1,702,500 based on adjusting Liong's reported net income for amortization and adding the controlling and noncontrolling shares of income.

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    © All Rights Reserved
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    of 1

    YUSTIKA ADININGSIH-F0319141- TUGAS INDIVIDU AKL 1 A

    E3-4
    Correction of consolidated net income

    Liong Corporation paid $2,500,000 in cash for an 80 percent interest in Taro Corporation on January 1,
    2016, when the book value of Taro’s net assets was $2,250,000. Some additional information is given
    below :

    a. Land was overvalued by $100,000


    b. Equipment with a five-year remaining useful life was undervalued by $150,000.
    c. Taro’s net income was $300,000.
    d. Liong’s net income was $1,440,000, including an income of $240,000 from Taro.

    Required :
    1. Calculate the goodwill that should appear in the consolidated balance sheet of Liong and
    Subsidiary at December 31, 2016.
    2. Calculate consolidated net income for 2016.

    ANSWER
    1. Goodwill that should appear in the consolidated balance sheet of Liong and Subsidiary at
    December 31, 2016
    Implied fair value of Taro ($2,250,000/80%) $2,812,500
    Less : Book value of Taro ( 2,250,000)
    Excess fair value over book value 562,500
    Equipment undervalued 150,000
    Goodwill at January 1, 2016 412,500
    Goodwill at December 31, 2016(Goodwill from consolidation) 412,500

    2. Consolidated net income for 2016


    Liong’s reported net income $1,200,000
    Less : Liong’s 80% share of amortization on overvalued equipment
    ($150,000/5 years) 30,000
    Controlling share of consolidated net income 1,170,000
    Noncontrolling share of consolidated net income($562,500 - $30,000) 532,500
    Consolidated net income $1,702,500

    80% of Liong’s net income $1,362,000

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