On January 1, 2019, Jannison Inc. acquired 90% of Techron Co. by paying $477,000 cash. There is no active trading market for Techron stock. Techron Co. reported a Common Stock account balance of $140,000 and Retained Earnings of $280,000 at that date. The fair value of Techron Co. was appraised at $530,000. The total annual amortization was $11,000 as a result of this transaction. The subsidiary earned $98,000 in 2019 and $126,000 in 2020 with dividend payments of $42,000 each year. Without regard for this investment, Jannison had income of $308,000 in 2019 and $364,000 in 2020. Prepare a proper presentation of consolidated net income and its allocation for 2019.

Answer is given below.

Explanation:

Economic Unit Concept  

                          20142015

Jannison Inc.308000364000

Techron Co.98000126000

Sub Total406000490000

Less : Amortization1100011000

Total Net Income395000479000

Non Controlling Interest  

= 10 % of Techron Co,  

(after deduction of amortization expense)  

= 10% (98000-11000)8700  

= 10% (126000-11000)  11500

Consolidated Net income386300467500

(after Noncontrolling interest allocation)  

Under Economic unit concept both business are taken as a single business unit, and accordingly incomes of both entities are clubbed to find income of business as whole

explanation: doctrine of respondeat superior is a legal doctrine that is commonly used in tort. this principle makes an employer or principal legally responsible for the wrongful acts done by an employee or agent, if such acts occur within the scope of the employment or agency.