Remburn Inc. Inc. purchased 90% of the outstanding voting shares of Stanton Inc. for $90,000 on January 1, 2019. On that date, Stanton Inc. had common shares and retained earnings worth $30,000 and $20,000, respectively. The equipment had a remaining useful life of 10 years from the date of acquisition. Stanton's trademark is estimated to have a remaining life of 5 years from the date of acquisition. Stanton's bonds mature on January 1, 2039. The inventory was sold in the year following the acquisition. Both companies use straight line amortization, and no salvage value is assumed for assets. Remburn Inc. and Stanton Inc. declared and paid $12,000 and $4,000 in dividends, respectively during the year.The balance sheets of both companies, as well as Stanton's fair values on the date of acquisition are shown below: Remburn Inc. Stanton Inc. Stanton Inc. (carrying value) (carrying value) (fair value) Cash $ 400 , 000 $ 5 , 000 $ 5 , 000 Accounts Receivable $ 240 , 000 $ 30 , 000 $ 30 , 000 Inventory $ 60 , 000 $ 30 , 000 $ 50 , 000 Investment in Stanton Inc. $ 90 , 000 Equipment (net) $ 160 , 000 $ 25 , 000 $ 20 , 000 Land $ 20 , 000 $ 30 , 000 Trademark $ 10 , 000 $ 15 , 000 Total Assets $ 950 , 000 $ 120 , 000 Current Liabilities $ 500 , 000 $ 50 , 000 $ 50 , 000 Bonds Payable $ 120 , 000 $ 20 , 000 $ 30 , 000 Common Shares $ 200 , 000 $ 30 , 000 Retained Earnings $ 130 , 000 $ 20 , 000 Total Liabilities and Equity $ 950 , 000 $ 120 , 000 \begin{array}{|l|r|r|r|}\hline & ext { Remburn Inc. } & ext { Stanton Inc. } & ext { Stanton Inc. } \\hline & ext { (carrying value) } & ext { (carrying value) } & ext { (fair value) } \\hline ext { Cash } & \$ 400,000 & \$ 5,000 & \$ 5,000 \\hline ext { Accounts Receivable } & \$ 240,000 & \$ 30,000 & \$ 30,000 \\hline ext { Inventory } & \$ 60,000 & \$ 30,000 & \$ 50,000 \\hline ext { Investment in Stanton Inc. } & \$ 90,000 & & \\hline ext { Equipment (net) } & \$ 160,000 & \$ 25,000 & \$ 20,000 \\hline ext { Land } & & \$ 20,000 & \$ 30,000 \\hline ext { Trademark } & & \$ 10,000 & \$ 15,000 \\hline ext { Total Assets } & \$ 950,000 & \$ 120,000 \\hline ext { Current Liabilities } & \$ 500,000 & \$ 50,000 & \$50,000 \\hline ext { Bonds Payable } & \$ 120,000 & \$ 20,000 & \$30,000\\hline ext { Common Shares } & \$ 200,000 & \$ 30,000 \\hline ext { Retained Earnings } & \$ 130,000 & \$ 20,000 \\hline ext { Total Liabilities and Equity } & \$ 950,000 & \$ 120,000 \\hline\end{array} Cash Accounts Receivable Inventory Investment in Stanton Inc. Equipment (net) Land Trademark Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Remburn Inc. (carrying value) $400 , 000 $240 , 000 $60 , 000 $90 , 000 $160 , 000 $950 , 000 $500 , 000 $120 , 000 $200 , 000 $130 , 000 $950 , 000 Stanton Inc. (carrying value) $5 , 000 $30 , 000 $30 , 000 $25 , 000 $20 , 000 $10 , 000 $120 , 000 $50 , 000 $20 , 000 $30 , 000 $20 , 000 $120 , 000 Stanton Inc. (fair value) $5 , 000 $30 , 000 $50 , 000 $20 , 000 $30 , 000 $15 , 000 $50 , 000 $30 , 000 The following are the financial statements for both companies for the fiscal year ended December 31, 2019:Income Statements Sales $ 295 , 750 $ 125 , 000 Dividend income $ 3 , 600 Less: Expenses: Cost of Goods Sold $ 200 , 000 $ 19 , 000 Depreciation $ 10 , 000 $ 25 , 000 Interest Expense $ 16 , 000 $ 36 , 000 Other Expenses $ 5 , 000 $ 28 , 000 Gain on Sale of Land $ − $ ( 8 , 000 ) Net Income $ 68 , 350 $ 25 , 000 \begin{array}{|l|r|r|}\hline ext { Sales } & \$ 295,750 & \$ 125,000 \\hline ext { Dividend income } & \$ 3,600 & \\hline ext { Less: Expenses: } & & \\hline ext { Cost of Goods Sold } & \$ 200,000 & \$ 19,000 \\hline ext { Depreciation } & \$ 10,000 & \$ 25,000 \\hline ext { Interest Expense } & \$ 16,000 & \$ 36,000 \\hline ext { Other Expenses } & \$ 5,000 & \$ 28,000 \\hline ext { Gain on Sale of Land } & \$- & \$(8,000) \\hline ext { Net Income } & \$ 68,350 & \$ 25,000 \\hline\end{array} Sales Dividend income Less: Expenses: Cost of Goods Sold Depreciation Interest Expense Other Expenses Gain on Sale of Land Net Income $295 , 750 $3 , 600 $200 , 000 $10 , 000 $16 , 000 $5 , 000 $ − $68 , 350 $125 , 000 $19 , 000 $25 , 000 $36 , 000 $28 , 000 $ ( 8 , 000 ) $25 , 000 Retained Earnings Statements Balance, January 1,2019 $ 130 , 000 $ 20 , 000 Net Income $ 68 , 350 $ 25 , 000 Dividends $ ( 12 , 000 ) $ ( 4 , 000 ) Balance, December 31 , 2019 $ 186 , 350 $ 41 , 000 \begin{array}{|l|r|r|}\hline ext { Balance, January 1,2019 } & \$ 130,000 & \$ 20,000 \\hline ext { Net Income } & \$ 68,350 & \$ 25,000 \\hline ext { Dividends } & \$(12,000) & \$(4,000) \\hline ext { Balance, December } 31,2019 & \$ 186,350 & \$ 41,000\\hline\end{array} Balance, January 1,2019 Net Income Dividends Balance, December 31 , 2019 $130 , 000 $68 , 350 $ ( 12 , 000 ) $186 , 350 $20 , 000 $25 , 000 $ ( 4 , 000 ) $41 , 000 Balance Sheets Remburn Inc. Stanton Inc. Cash $ 190 , 950 $ 156 , 000 Accounts Receivable $ 200 , 000 $ 150 , 000 Investment in Stanton Inc. $ 90 , 000 Inventory $ 100 , 000 $ 30 , 000 Equipment (net) $ 350 , 000 $ 25 , 000 Trademark $ 10 , 000 Total Assets $ 930 , 950 $ 371 , 000 Current Liabilities $ 424 , 600 $ 280 , 000 Bonds Payable $ 120 , 000 $ 20 , 000 Common Shares $ 200 , 000 $ 30 , 000 Retained Earnings $ 186 , 350 $ 41 , 000 Total Liabilities and Equity $ 930 , 950 $ 371 , 000 \begin{array}{|l|r|r|}\hline & ext { Remburn Inc. } & ext { Stanton Inc. } \\hline ext { Cash } & \$ 190,950 & \$ 156,000 \\hline ext { Accounts Receivable } & \$ 200,000 & \$ 150,000 \\hline ext { Investment in Stanton Inc. } & \$ 90,000 & \\hline ext { Inventory } & \$ 100,000 & \$ 30,000 \\hline ext { Equipment (net) } & \$ 350,000 & \$ 25,000 \\hline ext { Trademark } & & \$ 10,000 \\hline ext { Total Assets } & \$ 930,950 & \$ 371,000 \\hline ext { Current Liabilities } & \$ 424,600 & \$ 280,000 \\hline ext { Bonds Payable } & \$ 120,000 & \$ 20,000 \\hline ext { Common Shares } & \$ 200,000 & \$ 30,000 \\hline ext { Retained Earnings } & \$ 186,350 & \$ 41,000 \\hline ext { Total Liabilities and Equity } & \$ 930,950 & \$ 371,000 \\hline \end{array} Cash Accounts Receivable Investment in Stanton Inc. Inventory Equipment (net) Trademark Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Remburn Inc. $190 , 950 $200 , 000 $90 , 000 $100 , 000 $350 , 000 $930 , 950 $424 , 600 $120 , 000 $200 , 000 $186 , 350 $930 , 950 Stanton Inc. $156 , 000 $150 , 000 $30 , 000 $25 , 000 $10 , 000 $371 , 000 $280 , 000 $20 , 000 $30 , 000 $41 , 000 $371 , 000 Both companies use a FIFO system, and Stanton's entire inventory on the date of acquisition was sold during the following year. During 2019, Stanton Inc. borrowed $20,000 in cash from Remburn Inc. interest free to finance its operations. Remburn uses the Cost Method to account for its investment in Stanton Inc. Moreover, Stanton sold all of its land during the year for $28,000. Goodwill impairment for 2019 was determined to be $7,000.Remburn has chosen to value the non-controlling interest in Stanton on the acquisition date at the fair value of the subsidiary's identifiable net assets (identifiable net assets method).Prepare a statement of changes in Non-Controlling Interest for the year ended December 31, 2019.

Question

Remburn Inc. Inc. purchased 90% of the outstanding voting shares of Stanton Inc. for $90,000 on January 1, 2019. On that date, Stanton Inc. had common shares and retained earnings worth $30,000 and $20,000, respectively. The equipment had a remaining useful life of 10 years from the date of acquisition. Stanton's trademark is estimated to have a remaining life of 5 years from the date of acquisition. Stanton's bonds mature on January 1, 2039. The inventory was sold in the year following the acquisition. Both companies use straight line amortization, and no salvage value is assumed for assets. Remburn Inc. and Stanton Inc. declared and paid $12,000 and $4,000 in dividends, respectively during the year.The balance sheets of both companies, as well as Stanton's fair values on the date of acquisition are shown below:  Remburn Inc.   Stanton Inc.   Stanton Inc.   (carrying value)   (carrying value)   (fair value)   Cash  $ 400 , 000 $ 5 , 000 $ 5 , 000  Accounts Receivable  $ 240 , 000 $ 30 , 000 $ 30 , 000  Inventory  $ 60 , 000 $ 30 , 000 $ 50 , 000  Investment in Stanton Inc.  $ 90 , 000  Equipment (net)  $ 160 , 000 $ 25 , 000 $ 20 , 000  Land  $ 20 , 000 $ 30 , 000  Trademark  $ 10 , 000 $ 15 , 000  Total Assets  $ 950 , 000 $ 120 , 000  Current Liabilities  $ 500 , 000 $ 50 , 000 $ 50 , 000  Bonds Payable  $ 120 , 000 $ 20 , 000 $ 30 , 000  Common Shares  $ 200 , 000 $ 30 , 000  Retained Earnings  $ 130 , 000 $ 20 , 000  Total Liabilities and Equity  $ 950 , 000 $ 120 , 000 \begin{array}{|l|r|r|r|}\hline  &  	ext { Remburn Inc. }  &  	ext { Stanton Inc. }  &  	ext { Stanton Inc. } \\hline  &  	ext { (carrying value) }  &  	ext { (carrying value) }  &  	ext { (fair value) } \\hline 	ext { Cash }  &  \$ 400,000  &  \$ 5,000  &  \$ 5,000 \\hline 	ext { Accounts Receivable }  &  \$ 240,000  &  \$ 30,000  &  \$ 30,000 \\hline	ext { Inventory }  &  \$ 60,000  &  \$ 30,000  &  \$ 50,000 \\hline 	ext { Investment in Stanton Inc. }  &  \$ 90,000  &   &  \\hline 	ext { Equipment (net) }  &  \$ 160,000  &  \$ 25,000  &  \$ 20,000 \\hline 	ext { Land }  &   &  \$ 20,000  &  \$ 30,000 \\hline 	ext { Trademark }  &   &  \$ 10,000  &  \$ 15,000 \\hline 	ext { Total Assets }  &  \$ 950,000  &  \$ 120,000 \\hline 	ext { Current Liabilities }  &  \$ 500,000  &  \$ 50,000 & \$50,000 \\hline 	ext { Bonds Payable }  &  \$ 120,000  &  \$ 20,000  & \$30,000\\hline 	ext { Common Shares }  &  \$ 200,000  &  \$ 30,000 \\hline 	ext { Retained Earnings }  &  \$ 130,000  &  \$ 20,000 \\hline 	ext { Total Liabilities and Equity }  &  \$ 950,000  &  \$ 120,000 \\hline\end{array}  Cash   Accounts Receivable   Inventory   Investment in Stanton Inc.   Equipment (net)   Land   Trademark   Total Assets   Current Liabilities   Bonds Payable   Common Shares   Retained Earnings   Total Liabilities and Equity  ​  Remburn Inc.   (carrying value)  $400 , 000 $240 , 000 $60 , 000 $90 , 000 $160 , 000 $950 , 000 $500 , 000 $120 , 000 $200 , 000 $130 , 000 $950 , 000 ​  Stanton Inc.   (carrying value)  $5 , 000 $30 , 000 $30 , 000 $25 , 000 $20 , 000 $10 , 000 $120 , 000 $50 , 000 $20 , 000 $30 , 000 $20 , 000 $120 , 000 ​  Stanton Inc.   (fair value)  $5 , 000 $30 , 000 $50 , 000 $20 , 000 $30 , 000 $15 , 000 $50 , 000 $30 , 000 ​ ​   The following are the financial statements for both companies for the fiscal year ended December 31, 2019:Income Statements  Sales  $ 295 , 750 $ 125 , 000  Dividend income  $ 3 , 600  Less: Expenses:   Cost of Goods Sold  $ 200 , 000 $ 19 , 000  Depreciation  $ 10 , 000 $ 25 , 000  Interest Expense  $ 16 , 000 $ 36 , 000  Other Expenses  $ 5 , 000 $ 28 , 000  Gain on Sale of Land  $ − $ ( 8 , 000 )  Net Income  $ 68 , 350 $ 25 , 000 \begin{array}{|l|r|r|}\hline 	ext { Sales }  &  \$ 295,750  &  \$ 125,000 \\hline 	ext { Dividend income }  &  \$ 3,600  &  \\hline 	ext { Less: Expenses: }  &   &  \\hline 	ext { Cost of Goods Sold }  &  \$ 200,000  &  \$ 19,000 \\hline 	ext { Depreciation }  &  \$ 10,000  &  \$ 25,000 \\hline 	ext { Interest Expense }  &  \$ 16,000  &  \$ 36,000 \\hline 	ext { Other Expenses }  &  \$ 5,000  &  \$ 28,000 \\hline 	ext { Gain on Sale of Land }  &  \$-  &  \$(8,000) \\hline 	ext { Net Income }  &  \$ 68,350  &  \$ 25,000 \\hline\end{array}  Sales   Dividend income   Less: Expenses:   Cost of Goods Sold   Depreciation   Interest Expense   Other Expenses   Gain on Sale of Land   Net Income  ​ $295 , 750 $3 , 600 $200 , 000 $10 , 000 $16 , 000 $5 , 000 $ − $68 , 350 ​ $125 , 000 $19 , 000 $25 , 000 $36 , 000 $28 , 000 $ ( 8 , 000 ) $25 , 000 ​ ​   Retained Earnings Statements  Balance, January 1,2019  $ 130 , 000 $ 20 , 000  Net Income  $ 68 , 350 $ 25 , 000  Dividends  $ ( 12 , 000 ) $ ( 4 , 000 )  Balance, December  31 , 2019 $ 186 , 350 $ 41 , 000 \begin{array}{|l|r|r|}\hline 	ext { Balance, January 1,2019 }  &  \$ 130,000  &  \$ 20,000 \\hline 	ext { Net Income }  &  \$ 68,350  &  \$ 25,000 \\hline 	ext { Dividends }  &  \$(12,000)  &  \$(4,000) \\hline 	ext { Balance, December } 31,2019  &  \$ 186,350  &  \$ 41,000\\hline\end{array}  Balance, January 1,2019   Net Income   Dividends   Balance, December  31 , 2019 ​ $130 , 000 $68 , 350 $ ( 12 , 000 ) $186 , 350 ​ $20 , 000 $25 , 000 $ ( 4 , 000 ) $41 , 000 ​ ​   Balance Sheets  Remburn Inc.   Stanton Inc.   Cash  $ 190 , 950 $ 156 , 000  Accounts Receivable  $ 200 , 000 $ 150 , 000  Investment in Stanton Inc.  $ 90 , 000  Inventory  $ 100 , 000 $ 30 , 000  Equipment (net)  $ 350 , 000 $ 25 , 000  Trademark  $ 10 , 000  Total Assets  $ 930 , 950 $ 371 , 000  Current Liabilities  $ 424 , 600 $ 280 , 000  Bonds Payable  $ 120 , 000 $ 20 , 000  Common Shares  $ 200 , 000 $ 30 , 000  Retained Earnings  $ 186 , 350 $ 41 , 000  Total Liabilities and Equity  $ 930 , 950 $ 371 , 000 \begin{array}{|l|r|r|}\hline  &  	ext { Remburn Inc. }  &  	ext { Stanton Inc. } \\hline 	ext { Cash }  &  \$ 190,950  &  \$ 156,000 \\hline 	ext { Accounts Receivable }  &  \$ 200,000  &  \$ 150,000 \\hline 	ext { Investment in Stanton Inc. }  &  \$ 90,000  &  \\hline 	ext { Inventory }  &  \$ 100,000  &  \$ 30,000 \\hline 	ext { Equipment (net) }  &  \$ 350,000  &  \$ 25,000 \\hline 	ext { Trademark }  &   &  \$ 10,000 \\hline 	ext { Total Assets }  &  \$ 930,950  &  \$ 371,000 \\hline 	ext { Current Liabilities }  &  \$ 424,600  &  \$ 280,000 \\hline 	ext { Bonds Payable }  &  \$ 120,000  &  \$ 20,000 \\hline 	ext { Common Shares }  &  \$ 200,000  &  \$ 30,000 \\hline 	ext { Retained Earnings }  &  \$ 186,350  &  \$ 41,000 \\hline 	ext { Total Liabilities and Equity }  &  \$ 930,950  &  \$ 371,000 \\hline \end{array}  Cash   Accounts Receivable   Investment in Stanton Inc.   Inventory   Equipment (net)   Trademark   Total Assets   Current Liabilities   Bonds Payable   Common Shares   Retained Earnings   Total Liabilities and Equity  ​  Remburn Inc.  $190 , 950 $200 , 000 $90 , 000 $100 , 000 $350 , 000 $930 , 950 $424 , 600 $120 , 000 $200 , 000 $186 , 350 $930 , 950 ​  Stanton Inc.  $156 , 000 $150 , 000 $30 , 000 $25 , 000 $10 , 000 $371 , 000 $280 , 000 $20 , 000 $30 , 000 $41 , 000 $371 , 000 ​ ​   Both companies use a FIFO system, and Stanton's entire inventory on the date of acquisition was sold during the following year. During 2019, Stanton Inc. borrowed $20,000 in cash from Remburn Inc. interest free to finance its operations. Remburn uses the Cost Method to account for its investment in Stanton Inc. Moreover, Stanton sold all of its land during the year for $28,000. Goodwill impairment for 2019 was determined to be $7,000.Remburn has chosen to value the non-controlling interest in Stanton on the acquisition date at the fair value of the subsidiary's identifiable net assets (identifiable net assets method).Prepare a statement of changes in Non-Controlling Interest for the year ended December 31, 2019.

CIELO IBARRA · Accepted Answer

Final Answer :  Remburn Inc.Statement of Non-Controlling InterestFor the year ended December 31, 2019  Non-Controlling interest at acquisition  $ 7 , 000  NCI share of consolidated net income  $ ( 500 )  NCI share of dividends  ( $ 400 )  Non-Controlling Interest:  $ 16 , 100 \begin{array}{|l|r|}\hline 	ext { Non-Controlling interest at acquisition }  &  \$ 7,000 \\hline 	ext { NCI share of consolidated net income }  &  \$(500) \\hline 	ext { NCI share of dividends }  &  (\$ 400) \\hline 	ext { Non-Controlling Interest: }  &  \$ \mathbf{1 6}, \mathbf{1 0 0} \\hline\end{array}  Non-Controlling interest at acquisition   NCI share of consolidated net income   NCI share of dividends   Non-Controlling Interest:  ​ $7 , 000 $ ( 500 ) ( $400 ) $ 16 , 100 ​ ​

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