Alpha purchased an 80% interest in Beta on June 30, 2016.Both Alpha's and Beta's reporting periods end December 31.Which of the following represents the controlling interest in consolidated net income for 2016?
A)100% of Alpha's July 1-December 31 income plus 80% of Beta's July 1-December 31 income
B)100% of Alpha's July 1-December 31 income plus 100% of Beta's July 1-December 31 income
C)100% of Alpha's January 1-December 31 income plus 80% of Beta's July 1-December 31 income
D)100% of Alpha's January 1-December 31 income plus 80% of Beta's January 1-December 31 income

Question

Alpha purchased an 80% interest in Beta on June 30, 2016.Both Alpha's and Beta's reporting periods end December 31.Which of the following represents the controlling interest in consolidated net income for 2016?
A)​100% of Alpha's July 1-December 31 income plus 80% of Beta's July 1-December 31 income
B)​100% of Alpha's July 1-December 31 income plus 100% of Beta's July 1-December 31 income
C)​100% of Alpha's January 1-December 31 income plus 80% of Beta's July 1-December 31 income
D)​100% of Alpha's January 1-December 31 income plus 80% of Beta's January 1-December 31 income

Quizplus · Accepted Answer

Since Alpha acquired Beta on June 30, 2016, the controlling interest in consolidated net income for 2016 would include 100% of Alpha's income for the entire year (January 1-December 31) because Alpha is the parent company. It would also include 80% of Beta's income from July 1-December 31, the period after the acquisition, reflecting Alpha's 80% ownership interest in Beta.

Alpha Purchased an 80% Interest in Beta on June 30