Nama : Norma Riza Umami Sarwono

NPM : 18013010232
Solution E6-11

Par Corporation and Subsidiary

Schedule for Computation of Consolidated Net Income

2016 2017 2018 2019

Combined separate incomes $260,000 $220,00 $120,000 $210,000
Add: Amortization of negative
differential assigned to plant
assets ($50,000/10 years)* 5,000 5,000 5,000 5,000
Unrealized gain on land (Note
That Par’s $5,000 gain is
included in Par’s separate
income) (5,000) 5,000
Unrealized gain on machinery (25,000)
Piecemeal recognition of
Gain on machinery 5,000 5,000 5,000
Unrealized inventory profits (8,000) 8,000
Consolidated net income 260,000 205,000 122,000 233,000
Less: Noncontrolling interest share
2016 ($60,000-$5,000+$5,000)  20% (12,000)
2017 ($70,000+$5,000)  20% (15,000)
2018 ($80,000-$8,000+$5,000))  20% (15,400)
2019 ($90,000 + $8,000 +
$5,000 + $5,000))  20% (21,600)
Controlling share of NI $248,000 $190,000 $106,600 $211,400
Alternative Solution:
Par’s separate income $200,000 $150,000 $ 40,000 $120,000
Add: 80% of Sum’s income 48,000 56,000 64,000 72,000
Amortize the negative differential
assigned to plant asset  80% 4,000 4,000 4,000 4,000
Unrealized profit on upstream
Sale of land ($5,000  80%) (4,000) 4,000
Unrealized profit on downstream
Sale of machinery (25,000)
Piecemeal recognition of gain
($25,000/5 years) 5,000 5,000 5,000
Unrealized profit on upstream
Sale of inventory items
$8,000  80% (6,400) 6,400
Par’s net income and controlling
share of consolidated net income $248,000 $190,000 $106,600 $211,400

*Note: Since Par paid $40,000 more than book value for its 80% share, the implied total fair value minus
book value of Sum is $50,000.