Blank Corporation prepared the following summarized balance sheet on January 1, 20X1:

Shepard Company acquires 80 percent of Blank 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, Shepard Company purchases 70 percent of Blank's preferred shares for $21,000. The amount reported as noncontrolling interest in Shepard's consolidated balance sheet is
a. $9,000.
b. $20,000.
c. $29,000.
d. $50,000.

3. In addition to the common shares, Shepard Company purchases 70 percent of Blank's preferred shares for $21,000 on January 1, 20X1. If Shepard's retained earnings are $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, Shepard Company purchases 70 percent of Blank's preferred shares for $21,000 on January 1, 20X1. Shepard 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.

Transcribed Image Text:

S 20,000 30,000 40,000 60,000 Assets $150,000 Liabilities Preferred Stock Common Stock Retained Earnings Total Assets $150,000 Total Liabilities & Equities150,000