Sink Corporation prepared the following summarized Balance Sheeton January 1, 20X1: Plumber Company acquires 80 percent of
Question:
Sink Corporation prepared the following summarized Balance Sheeton January 1, 20X1:
Plumber Company acquires 80 percent of Sink Corporation’s common stock on January 1, 20X1, for $80,000. At that date, the fair value of the common shares held by the noncontrolling interest is $20,000.
Required
Select the correct answer for each of the following questions.
1. The amount reported as noncontrolling interest in the consolidated balance sheet is
a. $20,000
b. $26,000
c. $30,000
d. $50,000
2. In addition to the common shares, Plumber Company purchases 70 percent of Sink’s preferred shares for $21,000. The amount reported as noncontrolling interest in Plumber’s consolidated balance sheet is a. $9,000 b. $20,000 c. $29,000 d. $50,000
3. In addition to the common shares, Plumber Company purchases 70 percent of Sink’s preferred shares for $21,000 on January 1, 20X1. If Plumber’s Preferred Stock is $150,000 on December 31, 20X0, the consolidated retained earnings reported immediately after the stock purchases are
a. $48,000
b. $150,000
c. $198,000
d. $210,000
4. In addition to the common shares, Plumber Company purchases 70 percent of Sink’s preferred shares for $21,000 on January 1, 20X1. A plumber has no preferred shares outstanding. The amount of Preferred Stock reported in the consolidated balance sheet immediately after the stock purchases is
a. $0
b. $9,000
c. $21,000
d. $30,000
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds