Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Winner Corporation acquired 80 percent of the common shares and 70 percent of the preferred shares of First Corporation at underlying book value on January

Winner Corporation acquired 80 percent of the common shares and 70 percent of the preferred shares of First Corporation at underlying book value on January 1, 20X9. At that date, the fair value of the noncontrolling interest in Firsts common stock was equal to 20 percent of the book value of its common stock. Firsts balance sheet at the time of acquisition contained the following balances:

Assets 600,000 Liabilities 90,000

Preferred stock 100,000

Common stock 150,000

Retained Earnings 260,000

Total Assets 600,000 Total Liabilities 600,000

The preferred shares are cumulative and have a 10 percent annual dividend rate and are four years in arrears on January 1, 20X9. All of the $5 par value preferred shares are callable at $6 per share. During 20X9, First reported net income of $100,000 and paid no dividends.

Based on the preceding information, what is Firsts contribution to consolidated net income for 20X9?

$50,000

$80,000

$90,000

$100,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions