Pigeon Corporation acquired an 80% interest in Statue Company on January 1,2011,for $90,000 cash when Statue had Capital Stock of $60,000 and Retained Earnings of $40,000.The fair value/book value differential was attributable to equipment with a 10-year (straight-line)life.Statue suffered a $10,000 net loss in 2011 and paid no dividends.At year-end 2011,Statue owed Pigeon $18,000 on account.Pigeon's separate income for 2011 was $150,000.Controlling interest share of consolidated net income for 2011 was
A)$140,000.
B)$141,000.
C)$142,000.
D)$150,000.

Question

Quizplus · Accepted Answer

B)
Pigeon's separate income $150,000
Less:80% of Statue's $10,000 loss (8,000)
Less: Equipment depreciation
($12,500 × 80%)/ 10 years = (1,000)
Controlling Interest Share of Consolidated net income $141,000

Pigeon Corporation Acquired an 80% Interest in Statue Company on January