On January 1, 2014, Perez Company acquired 80% of Serrano Company's $300,000 par value common stock for
Question:
On January 1, 2014, Perez Company acquired 80% of Serrano Company's $300,000 par value common stock for $200,000 and 40% of Serrano Company's 8%, $100,000 par value preferred stock for $86,000. During 2014,
Serrano Company reported net income of $80,000 and declared cash dividends of $45,000. Perez Company reported net income (including dividends from subsidiary) of $200,000 in 2014.
Required:
In each of the following independent cases, compute consolidated net income for 2014.
Case 1: The preferred stock is noncumulative and nonparticipating.
Case 2: The preferred stock is cumulative and nonparticipating. Dividends were in arrears two years as of January 1, 2014.
Case 3: The preferred stock is noncumulative and fully participating.
Case 4: The preferred stock is cumulative and fully participating. Dividends were in arrears one year as of January 1, 2014.
Common StockCommon stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Step by Step Answer:
a Computation of dividend income Dividends in arre...View the full answer
