At the date of acquisition, consolidation eliminating entry (R) credits the noncontrolling interest in Starfruit in the amount of Now assume Pomegranate paid only \($20,000,000\) to acquire 90% of Starfruit. The fair value of the noncontrolling interest at the date of acquisition was $2,000,000.

On January 1, 2015, Pomegranate Company acquired 90% of the voting stock of Starfruit Company for \($91,700,000\) in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was \($6,300,000\). Starfruit’s book value was \($13,000,000\) at the date of acquisition. Starfruit’s assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by \($25,000,000\). Starfruit Company had previously unreported intangible assets, with a market value of \($40,000,000\) and 5-year life, straight-line, which were capitalized following GAAP.

a. $6,700,000

b. $4,900,000

c. $2,000,000

d. $ 700,000