On the 2014 consolidated income statement, the noncontrolling interest in net income of Starfruit is
a. $150,000
b. $175,000
c. $200,000
d. $750,000
Use the following information to answer questions l - 7 below:
On January l, 2012, Pomegranate Company acquired 90% of the voting stock of Starfruit Company for $91,700,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was $6,300,000. Starfruit's book value was $13,000,000 at the date of acquisition. Starfruit's assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $25,000,000. Starfruit Company had previously unreported intangible assets, with a market value of $40,000,000 and 5-year life, straight-line, which were capitalized following GAAP
Use the following additional information to answer questions 2 and 3 below:
Pomegranate uses the complete equity method to account for its investment in Starfruit on its own books. Goodwill recognized in this acquisition was impaired by a total of $2,000,000 in 2012 and 2013, and by $500,000 in 2014. It is now December 31,2014, the accounting year-end. Here is Starfruit Company's trial balance at December 31,2014:
Dr (Cr)
Current assets$ 28,100,000
Plant & equipment, net188,000,000
Intangibles2,000,000
Liabilities(180,000,000)
Capital stock(1,000,000)
Retained earnings, January 1(30,000,000)
Dividends400,000
Sales revenue(24,000,000)
Cost of goods sold10,000,000
Operating expenses6,500,000
$ 0