Posted in Reporting Equity Income, Noncontrolling Interest, and Pension Information – (Based on the Other Topics section.) A partial income statement for Half Moon, Inc. is reported below.
|
Half Moon, Inc. |
|
|
Sales revenue |
$3,504,600 |
|
•• |
|
|
Operating income |
$587,300 |
|
Equity income in related company (Able Co.) |
40,000 |
|
Income before income taxes |
$627,300 |
|
Provision for income taxes |
219,500 |
|
Income before noncontrolling interests |
$407,800 |
|
Noncontrolling interest in net income of subsidiary (Baker Co.) |
2,466 |
|
Net income |
$405,334 |
In addition, the following disclosure was found in the notes to the financial statements.
|
Projected benefit obligation |
$1,500,000 |
|
Fair value of plan assets |
1,300,000 |
|
Pension liability |
$200,000 |
|
Service cost |
$103,400 |
|
Return on plan assets |
100,100 |
|
Net pension expense |
$3,300 |
Required Explain each of the following.
A. What information is conveyed by the line labeled “Equity income in related company”? Describe the situation that must prevail for this line to appear on an income statement.
B. What information is conveyed by the line labeled “Noncontrolling interest in net income of subsidiary”? Describe the situation that must prevail for this line to appear on an income statement. Why is this amount subtracted in this case?
C. What information is conveyed by each of the first three lines of Note 7?
D. What information is conveyed by each of the second set of three lines of Note 7?
