Question

On January 3, 20X9, Pleat Company acquired 80 percent of Stitch Corporation's common stock for $344,000 in cash. At the acquisition date, the book values and fair values of Stitch's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Stitch. The stockholders' equity accounts of the two companies at the acquisition date are:

	Pleat			Stitch
Common Stock ($5 par value)	$	500,000			$	200,000
Additional Paid-In Capital		300,000				80,000
Retained Earnings		350,000				150,000
Total Stockholders' Equity	$	1,150,000			$	430,000

Noncontrolling interest was assigned income of $11,000 in Pleat's consolidated income statement for 20X9.

Based on the preceding information, what amount will be assigned to the noncontrolling interest on January 3, 20X9, in the consolidated balance sheet?

$68,800

$86,000

$44,000

$50,000

Answer 1

Answer:

The amount of non controlling interest on Jan 3, 20x9 in the consolidated balance sheet = $ 86,000

Working Notes :

1). Noncontrolling interest of Pleat company in Stitch Corporation = 100 - 80% = 20%

2). Book value of Total assets and liabilities are equal. Therefore,

Net Assets = Total Shareholders Equity = $ 430,000

3). Non controlling interest on Jan 3, 20x9 =

$430,000 × 20 % = $ 86,000