Question
The Hoover Corporation acquired 80 percent of the 100,000 outstanding voting shares of Rainbow, Inc., for $480,000 on January 1, 20X1. The remaining 20 percent
The Hoover Corporation acquired 80 percent of the 100,000 outstanding voting shares of Rainbow, Inc., for $480,000 on January 1, 20X1. The remaining 20 percent of Rainbows shares also traded actively at $120,000 before and after Hoovers acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Rainbows underlying accounts except that a building with a 5-year future life was undervalued by $60,000 and a fully amortized trademark with an estimated 10-year remaining life had a $80,000 fair value. At the acquisition date, Rainbow reported common stock of $100,000 and a retained earnings balance of $320,000. During year 20X1, Rainbow reported net income of $120,000 and declared dividend of $50,000. During year 20X2, it reported net income of $150,000 and declared dividend of $60,000. What is the balance of noncontrolling interest in net assets of Rainbowat the end of year 20X2?
$138,000.
$130,000.
$144,000.
$120,000.
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