Answered: that date, the fair value of the 25%…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Use this problem to answer the next three questions: On January 2, year 1, ABC Company purchased 75% of XYZ's outstanding common stock. On that date, the fair value of the 25% noncontrolling interest was $35,000. During year 1, XYZ had net income of $20,000. Selected balance sheet data at December 31, year 1, is as follows: ABC (Column 1), XYZ (Column 2)

1. During year 1, ABC and XYZ paid cash dividends of $25,000 and $5,000, respectively, to their shareholders. There were no other intercompany transactions. In its December 31, year 1 consolidated statement of retained earnings, what amount should ABC report as dividends paid?

2. In ABC's December 31, year 1, consolidated balance sheet, what amount should be reported as noncontrolling interest in net assets?

3. In its December 31, year 1 consolidated balance sheet, what amount should ABC report as common stock?

Total assets
$420,000
$120,000
100,000
200,000
$420.000
$180,000
$ 60,000
Liabilities
Common stock
50,000
Retained carnings
70,000
$180,000

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