Answer:
Total Pops income from Son in 2016 = $30,720
Total non-controlling interest shares for 2016 = $241,280
Explanation:
Investment in Son as at Jan 2 2016 = $1,200,000
Correction of Stake in Son as a result of under valued inventory:
Total Assets on Jan 2, 2016 = $1,200,000.
Pop Corporation paid for 80% = $960,000 by paying $1,200,000
But an error of understatement revalues the Assets at $1,200,000 + $50,000 = $1,250,000. This would have equally raised the Net income by $50,000 and increased Total Equity to $1,250,000.
Pops stake in the Business is therefor $960,000 divided $1,250,000 = 76.8%
Using the Equity Method, Pop's income is:
<em>We are not told if Pop paid additional cash to make up the undervalued stock, thus we will assume his adjusted stake in the business is 76.8%</em>
Net income = 76.8% x $280,000 = $215,040
Less Dividend = 76.8% x $240,000 = $184,320
Total Pops income from Son = $30,720
The non-controlling interest shares will be:
Capital stock = 23.2% x $600,000 = $139,200
Retained Earnings = 23.2% x $440,000 = $102,080
Total non-controlling interest shares for 2016 = $241,280
