1. Pomery Company has a financial relationship with Styro Inc., a separate legal entity, but does not own any of Styro's voting stock. On January 1, 2021, Pomery determines that Styro is a variable interest entity and that Pomery is Styro's prime beneficiary. Sparkle's shareholders' equity on January 1, 2021 is as follows:

Capital stock	$ 2,000
Retained earnings	7,000
Total	$9,000

Styro's net assets are reported at values approximating fair value, except that its equipment (5-year life, straight-line) is overvalued by $3,000 and it has previously unreported indefinite life identifiable intangibles valued at $4,000. The fair value of Styro at January 1, 2021 is $15,000. Pomery and Styro were not under common control prior to January 1, 2021. Styro reported net income of $800 in 2021, and identifiable intangibles were impaired by $200. Styro reported net income of $650 in 2022, and identifiable intangibles were not impaired. Goodwill was not impaired in either year. Noncontrolling interest in net income, reported on the 2022 consolidated income statement, is

	A.	$ 50
	B.	$ 650
	C.	$1,450
	D.	$1,250

QUESTION 45

1. Parkin Industries, a U.S. company, acquired a wholly-owned subsidiary, located in Italy, at the beginning of the current year, for 200,000. The subsidiary's functional currency is the euro. The balance sheet of the subsidiary at the date of acquisition was as follows:

Assets
Current assets	50,000
Plant and equipment, net	200,000
Total assets	250,000
Liabilities and Equity
Liabilities	160,000
Capital stock	20,000
Retained earnings	70,000
Total liabilities and equity	250,000

Appropriate revaluations of the subsidiary's assets at the date of acquisition are as follows:

	Inventories are undervalued by 1,000. The subsidiary sold the inventory during the current year.
	Equipment is undervalued by 15,000. The equipment has a 10-year remaining life, straight-line.
	Identifiable indefinite life intangible assets, previously unreported, have a fair value of 40,000.

During the current year, there was no impairment of either identifiable intangible assets or goodwill. The exchange rate at the beginning of the year was $1.20/. The average rate for the year was $1.22/, and the rate at the end of the year was $1.25/. At the end of the year, consolidation eliminating entry (O) includes a debit to depreciation expense in the amount of:

	A.	$1,875
	B.	$1,830
	C.	$1,800
	D.	$1,500