On January 1, 2011, Perez Company acquired 80 of Serrano Company 's $300,000 par value common stock for $200,000 and 40 of Serrano Company 's 8 , $100,000 par value preferred stock for $86,000 During 2011, Serrano Company reported net income of $80,000 and declared cash dividends of $45,000 Perez C...

Cost Method Case 1 2 3 4 Reported net income Perez Co 200000 200000 200000 200000 Less Dividend inco ...

On January 1, 2011, Perez Company acquired 80% of Serrano Company's $300,000 par value common stock for

Question:

On January 1, 2011, Perez Company acquired 80% of Serrano Company's $300,000 for $200,000 and 40% of Serrano Company's 8%, $100,000 preferred stock for $86,000. During 2011, Serrano Company reported net income of $80,000 and declared cash dividends of $45,000. Perez Company reported net income (including dividends from subsidiary) of $200,000 in 2011.

Required:
In each of the following independent cases, compute consolidated net income for 2011.
Case 1: The preferred stock is noncumulative and nonparticipating.
Case 2: The preferred stock is cumulative and nonparticipating. Dividends were in arrears two years as of January 1, 2011.
Case 3: The preferred stock is noncumulative and fully participating.
Case 4: The preferred stock is cumulative and fully participating. Dividends were in arrears one year as of January 1, 2011.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...