summarized balance sheets of corner company and its subsidiary brook corpo ration on 737245
Summarized balance sheets of Corner Company and its subsidiary Brook Corpo ration on December 31, Year 4, were as follows:
|
Current assets |
Corner $ 160,000 |
|
Brook $ 700,000 |
Consolidated $ 860,000 |
|
Investment in Brook (cost) |
640,000 |
|
|
|
|
Other assets |
600,000 |
|
900,000 |
1,500,000 |
|
|
$1,400,000 |
|
$1,600,000 |
$2,360,000 |
|
Liabilities |
$ 800,000 |
|
$ 200,000 |
$1,000,000 |
|
Common shares |
900,000 |
|
600,000 |
900,000 |
|
Retained earnings |
(300,000) |
|
800,000 |
180,000 |
|
Non controlling interest |
— |
|
— |
280,000 |
|
|
$1,400,000 |
|
$1,600,000 |
$2,360,000 |
On the date that Corner acquired its interest in Brook, there was no acquisi tion differential and the carrying amounts of Brook’s net assets were equal to fair values. During Year 4, Corner reported a net loss of $60,000, while Brook reported a net income of $140,000. No dividends were declared by either company during Year 4. Corner uses the cost method to account for its investment.
Required:
Compute the following:
(a) The percentage of Brook’s shares owned by Corner
(b) Consolidated net income attributable to Corner ’s sha r eholders for Y ear 4
(c) Corner ’s December 31, Y ear 3, r etained earnings if it had used the equity method to account for its investment
(d) The r etained earnings of B r ook on the date that Corner acqui r ed it inte r est in B r ook