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On January 1, 2009, Nichols Company acquired 80% of Smith Company's common stock and 40% of its non-voting, cumulative preferred stock. The consideration transferred by Nichols was $1,200,000 for the common and $124,000 for the preferred. Any excess acquisition-date fair value over book value is considered goodwill. The capital structure of Smith immediately prior to the acquisition is: $500,000 Common stock, $10 par value (50,000 shares outstanding) Preferred stock, 6% cumulative, $100 par value. 3,000 shares outstanding Additional paid in capital Retained earnings 300,000 200,000 500,000 $1,500,000 Total stockholders' equity 38. Compute the noncontrolling interest in Smith at date of acquisition. A. S486,000 B. $480,000. C. $300,000 D. $150,000 E. $120,000 40. If Smith's net income is $100,000 in the year following the acquisition, A. the portion allocated to the common stock (residual amount) is $92,800. B. $10,800 preferred stock dividend will be subtracted from net income attributed to common stock in arriving at noncontrolling interest in subsidiary income. C. the noncontrolling interest balance will be $27,200. D. the preferred stock dividend will be ignored in noncontrolling interest in subsidiary net income because Nichols owns the noncontrolling interest of preferred stock E. the noncontrolling interest in subsidiary net income is $30,800. On January 1, 2009, Nichols Company acquired 80% of Smith Company's common stock and 40% of its non-voting, cumulative preferred stock. The consideration transferred by Nichols was $1,200,000 for the common and $124,000 for the preferred. Any excess acquisition-date fair value over book value is considered goodwill. The capital structure of Smith immediately prior to the acquisition is: $500,000 Common stock, $10 par value (50,000 shares outstanding) Preferred stock, 6% cumulative, $100 par value. 3,000 shares outstanding Additional paid in capital Retained earnings 300,000 200,000 500,000 $1,500,000 Total stockholders' equity 38. Compute the noncontrolling interest in Smith at date of acquisition. A. S486,000 B. $480,000. C. $300,000 D. $150,000 E. $120,000 40. If Smith's net income is $100,000 in the year following the acquisition, A. the portion allocated to the common stock (residual amount) is $92,800. B. $10,800 preferred stock dividend will be subtracted from net income attributed to common stock in arriving at noncontrolling interest in subsidiary income. C. the noncontrolling interest balance will be $27,200. D. the preferred stock dividend will be ignored in noncontrolling interest in subsidiary net income because Nichols owns the noncontrolling interest of preferred stock E. the noncontrolling interest in subsidiary net income is $30,800