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 goodwill. On January 1, 20X6, the retained earnings of Sparrow was $175,000. The entire investment was sold for $300,000 on January 1, 20X6. At that date, Partridge had on hand inventory it had purchased from Sparrow for $50,000. Sparrow has a gross profit percentage of 40%. The gain (loss) was ____.
A)$105,000
B)$81,000
C)$27,000
D)$39,000

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 goodwill. On January 1, 20X6, the retained earnings of Sparrow was $175,000. The entire investment was sold for $300,000 on January 1, 20X6. At that date, Partridge had on hand inventory it had purchased from Sparrow for $50,000. Sparrow has a gross profit percentage of 40%. The gain (loss) was ____.
A)$105,000 
B)$81,000 
C)$27,000 
D)$39,000

Quizplus · Accepted Answer

Determination and Distribution of Excess Schedule:
 11eb11de_92f4_f112_ad38_1bb8bdc37f5a_TB2014_00 
 11eb11de_92f4_f113_ad38_ed97b73f0922_TB2014_00

Partridge Purchased a 60% Interest in Sparrow on January 1