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Question: 8)Pickens Company acquires 80% of Saluda Company for $500,000 on January 1, 2015. Saluda reported...

8)Pickens Company acquires 80% of Saluda Company for $500,000 on January 1, 2015. Saluda reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired. Saluda earns income and pays dividends as follows:

	2015	2016	2017
Net Income	$100,000	$110,000	$120,000
Dividends	40,000	50,000	60,000

Assume the equity method is applied. Compute Pickens's investment in Saluda at December 31, 2015. A. $500,000. B. $574,400. C. $593,000. D. $542,400. E. $492,000.

9)Pickens Company acquires 80% of Saluda Company for $500,000 on January 1, 2015. Saluda reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired. Saluda earns income and pays dividends as follows:

	2015	2016	2017
Net Income	$100,000	$110,000	$120,000
Dividends	40,000	50,000	60,000

Assume the equity method is applied. Compute the noncontrolling interest in the net income of Saluda at December 31, 2017. A. $22,600. B. $24,000. C. $23,400. D. $20,000. E. $18,600.

10)In comparing U.S. GAAP and international financial reporting standards (IFRS) with regard to a basis for measurement of a noncontrolling interest, which of the following is true?

A. U.S. GAAP requires acquisition-date fair value measurement and IFRS requires the acquiree's identifiable net asset fair value measurement. B. U.S. GAAP and IFRS both require acquisition-date fair value measurement. C. U.S. GAAP and IFRS both require the acquiree's identifiable net asset fair value measurement. D. U.S. GAAP requires acquisition-date fair value measurement, but IFRS allows an option for acquisition-date fair value measurement. E. U.S. GAAP and IFRS both apportion goodwill to the parent only.