Musical Corporation acquires 80 percent of Dustin Corporation€™s common shares on January 1, 20X2. On January 2, 20X2, Dustin acquires 60 percent of Rustic Corporation€™s common stock. Information on company book values on the date of purchase and operating results for 20X2 is as follows:

The fair values of the noncontrolling interests of Dustin and Rustic at the dates of acquisition were $60,000 and $80,000, respectively.

Required
Select the correct answer for each of the following questions.
1. Consolidated net income assigned to the controlling interest for 20X2 is
a. $180,000.
b. $188,000.
c. $194,000.
d. $234,000.
2. The amount of 20X2 income assigned to the noncontrolling interest of Rustic Corporation is
a. $0.
b. $20,000.
c. $30,000.
d. $50,000.
3. The amount of 20X2 income assigned to the noncontrolling interest of Dustin Corporation is
a. $10,000.
b. $16,000.
c. $22,000.
d. $26,000.
4. The amount of income assigned to the noncontrolling interest in the 20X2 consolidated income statement is
a. $20,000.
b. $22,000.
c. $42,000.
d. $46,000.
5. Assume that Dustin pays $150,000, rather than $120,000, to purchase 60 percent of Rustic's common stock, and the fair value of the noncontrolling interest is $100,000 at the date of acquisition. If the differential is amortized over 10 years, the effect on 20X2 income assigned to the controlling shareholders will be a decrease of
a. $0.
b. $2,400.
c. $3,000.
d.$5,000.

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Company Musical Corporation Dustin Corporation Rustic Corporation Book Value Purchase Price 20X2 Operating Income $800,000 300,000 200,000 $240,000 120,000 $100,000 80,000 50,000