Note: Problems 1 through 37 assume the use of the acquisition method. Problems 38 throug...

Note: Problems 1 through 37 assume the use of the acquisition method. Problems 38 through 40 assume the use of the purchase method.

Use the following information for Problems 12 through 14:

West Company acquired 60 percent of Solar Company for $300,000 when Solar’s book value was $400,000. The newly comprised 40 percent noncontrolling interest had an assessed fair value of $200,000. Also at the acquisition date, Solar had a trademark (with a 10-year life) that was undervalued in the financial records by $60,000. Also, patented technology (with a 5-year life) was undervalued by $40,000. Two years later, the following figures are reported by these two companies (stockholders’ equity accounts have been omitted):

Assuming Solar Company has paid no dividends, what are the noncontrolling interest’s share of the subsidiary’s income and the ending balance of the noncontrolling interest in the subsidiary?

a. $26,000 and $230,000.

b. $28,800 and $252,000.

c. $34,400 and $240,800.

d. $40,000 and $252,000.