Question
Stage Company operates on a calendar-year basis, reporting its results of operations quarterly. For the first quarter of 20X1, Stage reported sales of $242,000 and
Stage Company operates on a calendar-year basis, reporting its results of operations quarterly. For the first quarter of 20X1, Stage reported sales of $242,000 and operating expenses of $182,000 and paid dividends of $10,000. On April 1, 20X1, Parachute Theaters Inc. acquired 85 percent of Stage's common stock for $799,000. At that date, the fair value of the noncontrolling interest was $141,000, and Stage had 100,000 outstanding shares of $1 par common stock, originally issued at $6 per share. The differential is related to goodwill. On December 31, 20X1, the management of Parachute Theaters reviewed the amount attributed to goodwill as a result of its purchase of Stage common stock and concluded that goodwill was not impaired.
Stage's retained earnings statement for the full year 20X1 appears as follows:
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