Page Company purchased an 80% interest in the common stock of the Seed Company for $600,000 on January 1, 20X4, when Seed Company had the following stockholders' equity: Any excess of cost over book value on the common stock purchase was attributed to goodwill. Page does not hold any of Seed's preferred stock. Seed had net income of $40,000 during 20X4 and paid no dividends.
The preferred stock is two years in arrears on January 1, 20X4. The noncontrolling interest share of 20X4 net income was ____.
A)$3,200
B)$6,000
C)$8,000
D)$16,000

Question

Page Company purchased an 80% interest in the common stock of the Seed Company for $600,000 on January 1, 20X4, when Seed Company had the following stockholders' equity:  Any excess of cost over book value on the common stock purchase was attributed to goodwill. Page does not hold any of Seed's preferred stock. Seed had net income of $40,000 during 20X4 and paid no dividends.
The preferred stock is two years in arrears on January 1, 20X4. The noncontrolling interest share of 20X4 net income was ____.
A)$3,200 
B)$6,000 
C)$8,000 
D)$16,000

Quizplus · Accepted Answer

The Answer is B

Page Company Purchased an 80% Interest in the Common Stock