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Wally Corporation acquired 70 percent of the common shares and 60 percent of the preferred shares of Safety Corporation at underlying book value on January 1, 20X6. At that date, the fair value of the noncontrolling interest in Safety’s common stock was equal to 30 percent of the book value of its common stock. Safety’s balance sheet at the time of acquisition contained the following balances:

Assets $700,000 Liabilities $110,000

Preferred Stock 100,000

Common Stock 200,000

Retained Earnings 290,000

Total Assets $700,000 Total Liabilities and Equities $700,000

The preferred shares are cumulative and have an 8 percent annual dividend rate and are three years in arrears on January 1, 20X6. All of the $10 par value preferred shares are callable at $12 per share. During 20X6, Safety reported net income of $80,000 and paid no dividends.

11. Based on the preceding information, what will be the amount of income to be assigned to the noncontrolling interest in the 20X6 consolidated income statement?

Answer is D. $24,800

12. Based on the preceding information, the amount assigned to the noncontrolling stockholders’ share of preferred stock interest in the preparation of a consolidated balance sheet on January 1, 20X6 is

Answer is A. $57,600

13. Based on the preceding information, what is the portion of Safety’s retained earnings assignable to its preferred shareholders on January 1, 20X6?

Answer is B. $44,000

14. Based on the information provided, what is the book value of the common stock on January 1, 20X6?

Answer is C. $446,000

15. Based on the information provided, what amount will be reported as the noncontrolling interest in the consolidated balance sheet on January 1, 20X6?

Answer is B. $191,400

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Tod Thiel
Tod ThielLv2
28 Sep 2019

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