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. During the first 6 months of 20X6, $25,000 was earned by Sparrow. The entire investment was sold for $300,000 on July 1, 20X6. The gain (loss) was ____.
A)$87,000
B)$78,000
C)$12,000
D)$60,000

Question

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. During the first 6 months of 20X6, $25,000 was earned by Sparrow. The entire investment was sold for $300,000 on July 1, 20X6. The gain (loss) was ____.
A)$87,000 
B)$78,000 
C)$12,000 
D)$60,000

Quizplus · Accepted Answer

Determination and Distribution of Excess Schedule:
 11eb11de_92f4_a2ef_ad38_03f2bbedd130_TB2014_00 
 11eb11de_92f4_a2f0_ad38_39c5e02ee8bf_TB2014_00

Partridge Purchased a 60% Interest in Sparrow on January 1