On January 2, 2011, Pare Co. purchased 75% of Kidd Co.s outstanding common stock. On that date,
Question:
On January 2, 2011, Pare Co. purchased 75% of Kidd Co.’s outstanding common stock. On that date, the fair value of the 25% noncontrolling interest was $35,000. During 2011, Kidd had net income of $20,000. Selected balance sheet data at December 31, 2011, is as follows:
Pare Kidd Total assets $420,000 $180,000 Liabilities $120,000 $60,000 Common stock 100,000 50,000 Retained earnings 200,000 70,000 $420,000 $180,000 During 2011 Pare and Kidd paid cash dividends of $25,000 and $5,000, respectively, to their shareholders. There were no other intercompany transactions.
1. In its December 31, 2011 consolidated statement of retained earnings, what amount should Pare report as dividends paid?
a. $ 5,000
b. $25,000
c. $26,250
d. $30,000
e. $35,000.
2. In Pare’s December 31, 2011 consolidated balance sheet, what amount should be reported as noncontrolling interest in net assets?
a. $30,000
b. $35,000
c. $38,750
d. $40,000
e. $48,000
3. In its December 31, 2011 consolidated balance sheet, what amount should Pare report as common stock?
a. $ 50,000
b. $100,000
c. $137,500
d. $150,000
e. $158,000
Expert Answer:
