Question
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2020. Demers reported common stock of $300,000 and retained earnings of $210,000 on
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2020. Demers 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. Demers earns income and declares and pays dividends as follows:
|
| 2020 | 2021 | 2022 |
| Net Income | $100,000 | $120,000 | $130,000 |
| Dividends | 40,000 | 50,000 | 60,000 |
Assume the partial equity method is applied. Compute the noncontrolling interest in the net income of Demers at December 31, 2020.
| A. $20,000. | ||
| B. $12,000. | ||
| C. $18,600. | ||
| D. $10,600. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started