19)

Now assume that Pom paid $22,000,000 to acquire 90% of Star and that the FV of the NCI at acquisition date was $2,000,000.

On 1/1/15, Pom Company Acquired 90% of the voting common stock of Star Co. for $91,700,000 in cash, The FV of the NCI in Star at date of acquisition was 6,300,000. Stars net book value is $14,000,000 at date of acquisition. Stars assets and liabilities were reported on its books at values approximating FV, except its P&E (10 yr. life, S-L) was overvalued by $25,000,000 and Star had previously unreported intangible assets with a FV of $40,000,000 (5 yr. life, S-L).

Pom uses the complete equity method on its books to account for its investment in Star. Goodwill recognized in this acquisition was impaired a total of $2,000,000 in 2015 and 2016, and by $500,000 in 2017. Now it is 12/31/2017, the fiscal year end. Below is Stars trial balance at 12/31/2017.

Debit (Credit)

Current assets $ 28,200,000

P&E, Net 188,000,000

Intangible assets 2,000,000

Liabilities (180,000,000)

Capital stock (1,000,000)

Retained earnings, 1/1/2017 (29,500,000)

AOCI (500,000)

Dividends paid 400,000

Sales revenues (24,000,000)

COGS 10,000,000

Operating expenses 6,500,000

Other comprehensive income (100,000)

At date of acquisition, eliminating entry (R) credits the NCI in Star in the amount of

a) $700,000

b) $600,000

c) $1,000,000

d) $9,400,000