Patterson Company Acquired 90% of Starr Corporation on January 1

Essay

Patterson Company acquired 90% of Starr Corporation on January 1, 2014 for $2,250,000. Starr had net assets at that time with a fair value of $2,500,000. At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between Starr's net book value and net fair value. Assume the fair value exceeds the book value, and $20,000 pertains to the whole company. Separate from any earnings from Starr, Patterson reported net income in 2014 and 2015 of $550,000 and $575,000, respectively. Starr reported the following net income and dividend payments:
Required: Calculate the following:
• Investment in Starr shown on Patterson's ledger at December 31, 2014 and 2015.
• Investment in Starr shown on the consolidated statements at December 31, 2014 and 2015.
• Consolidated net income for 2014 and 2015.
• Noncontrolling interest balance on Patterson's ledger at December 31, 2014 and 2015.
• Noncontrolling interest balance on the consolidated statements at December 31, 2014 and 2015.