Financial Reporting and Analysis - Turner

When calculating the contribution of the equity portfolio to Foster’s net income for the year (Question 1) why don’t we take off the $187.5 thousand of NI related to the sale of goods to Foster during the year from the $15,000.00 of Foster’s share of investee’s net income for the year. Data are below.

Foster Inc. Equity Portfolio

(year end, C$ thousands)



Alton Inc.

Barker Inc.

Cosmic Inc.

Darnell Inc. (see notes)


Fair value through profit or loss (held for trading)


Available for sale

Associated company


beginning of year





Market value,

end of year





Dividends received during the year





Foster’s share of investee’s net income for the year



· Darnell Inc. has $2 billion in total assets.

· Foster owns 40% of Darnell’s equity and has representation on Darnell’s Board of Directors but does not have effective control.

· At time of acquisition, the fair value of all assets and liabilities was equal to their book value.

· Darnell reported net income of $187.5 thousand on sale of goods to Foster during the year.

Because CFAI already kindly did it for you as in the table you see Foster’s share of Darnell’s net income, so you don’t need to touch this number.

The intercompany transaction info is needed in an other question.