Choose the correct.On January 1, 2016, Pride Corporation 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, 2016, Star’s net assets had a total carrying amount of $420,000. Equipment (eight-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 (four-year remaining life), but not recorded on its books. Star recorded net income of $70,000 in 2016 and $80,000 in 2017. Each year since the acquisition, Star has declared a $20,000 dividend. At January 1, 2018, Pride’s retained earnings show a $250,000 balance.Selected account balances for the two companies from their separate operations were as follows: Pride Star2018 Revenues. . . $498,000 $285,0002018 Expenses. . . 350,000 195,000 What is consolidated net income for 2018?a. $194,000b. $197,500c. $203,000d. $238,000
Choose the correct.On January 1, 2016, Pride Corporation 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, 2016, Star’s net assets had a total carrying amount of $420,000. Equipment (eight-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 (four-year remaining life), but not recorded on its books.
Star recorded net income of $70,000 in 2016 and $80,000 in 2017. Each year since the acquisition, Star has declared a $20,000 dividend. At January 1, 2018, Pride’s
Selected account balances for the two companies from their separate operations were as follows:
Pride Star
2018 Revenues. . . $498,000 $285,000
2018 Expenses. . . 350,000 195,000
What is consolidated net income for 2018?
a. $194,000
b. $197,500
c. $203,000
d. $238,000
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