Partridge & Sparrow scenario:
Partridge purchased a 60% interest in Sparrow on January 1, 20X1, for $240,000. At the time of the purchase, Sparrow had the following stockholders' equity:
Any excess is attributable to equipment with a 10-year life. On January 1, 20X6, the retained earnings of Sparrow was $175,000.
-Refer to Partridge and Sparrow. The entire investment was sold for $300,000 on January 1, 20X6. The gain was ____.
A) $87,000
B) $90,000
C) $27,000
D) $78,000

Question

Partridge & Sparrow scenario:
Partridge purchased a 60% interest in Sparrow on January 1, 20X1, for $240,000. At the time of the purchase, Sparrow had the following stockholders' equity:
  Any excess is attributable to equipment with a 10-year life. On January 1, 20X6, the retained earnings of Sparrow was $175,000.
-Refer to Partridge and Sparrow. The entire investment was sold for $300,000 on January 1, 20X6. The gain was ____.
A) $87,000 
B) $90,000 
C) $27,000 
D) $78,000

Quizplus · Accepted Answer

The Answer is A

Partridge & Sparrow Scenario