Select the correct answer for each of the following questions.

1. Parent Company holds 80 percent of the stock of Subsidiary Company. Parent net assets are \(\$ 400,000\), and Subsidiary net assets are \(\$ 150,000\). Noncontrolling interest in the consolidated balance sheet is reported at:

a. \(\$ 30,000\).

b. \(\$ 50,000\).

c. \(\$ 80.000\).

d. \(\$ 110.000\).

2. Minor Corporation reports net assets of \(\$ 300,000\) at book value. These assets have an estimated market value of \(\$ 350,000\). If Major Corporation buys 80 percent ownership of Minor for \(\$ 275,000\), goodwill will be reported in the consolidated balance sheet in the amount of:

a. \(\$ 0\)

b. \(\$ 25,000\).

c. \(\$ 35,000\).

d. \(\$ 40.000\).
3. In question 2 , the noncontrolling interest will be reported in the amount of:

a. \(\$ 55,000\).

b. \(\$ 60,000\).

c. \(\$ 70,000\).

d. None will be reported.
4. Small Company reports total assets of \(\$ 400,000\) and liabilities of \(\$ 100,000\). Big Company reports total assets of \(\$ 900,000\) and liabilities of \(\$ 200,000\). Included in Big Company assets is its investment of \(\$ 350,000\) in Small Company. When a consolidated balance sheet is prepared, what amount of total assets will be reported if Big holds 100 percent ownership of Small?

a. \(\$ 900,000\).

b. \(\$ 950,000\).

c. \(\$ 1,000,000\).

d. \(\$ 1,300,000\).
5. Computo Corporation recently purchased 80 percent of the stock of Tape Decks Inc. for \(\$ 232.000\). At the date of purchase the consolidated balance sheet showed \(\$ 40,000\) of goodwill from this acquisition. The underlying book value of Tape Deck's net assets at the time of acquisition was:

a. \(\$ 192,000\).

b. \(\$ 232.000\).

c. \(\$ 240,000\).

d. \(\$ 290,000\).