What is consolidated net income for Pride and Star for 2013? a. $194,000. b. $197,500. c. $203,000.

Question:

What is consolidated net income for Pride and Star for 2013?

a. $194,000.

b. $197,500.

c. $203,000.

d. $238,000.

On January 1, 2011, Pride Co. purchased 90 percent of the outstanding voting shares of Star Inc. for $540,000 cash. The acquisition-date fair value of the noncontrolling interest was $60,000. At January 1, 2011, Star's net assets had a total carrying amount of $420,000. Equipment (8-year remaining life) was undervalued on Star's financial records by $80,000. Any remaining excess fair value over book value was attributed to a customer list developed by Star (4-year remaining life), but not recorded on its books. Star recorded income of $70,000 in 2011 and $80,000 in 2012. Each year since the acquisition, Star has paid a $20,000 dividend. At January 1, 2013, Pride's retained earnings show a $250,000 balance.

Selected account balances for the two companies from their separate operations were as follows:

_____________________________Pride _________________Star

2013 Revenues . . . . . . . . . . . . . . $498,000 ......................$285,000

2013 Expenses . . . . . . . . . . . . . . . 350,000 ........................195,000

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Fundamentals of Advanced Accounting

ISBN: 978-0077667061

5th edition

Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik

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