Petunia Corporation acquired 90 percent of the stock of Spring Company on January 1, 20X2, for $360,000. At that date, the fair value of the noncontrolling interest was $40,000. Spring's balance sheet contained the following amounts at the time of the combination: Cash$20,000 Accounts Payable$25,000 Accounts Receivable 60,000 Bonds Payable 75,000 Inventory 70,000 Common Stock 100,000 Buildings and Equipment (net) 350,000 Retained Earnings 300,000 Total Assets$500,000 Total Liabilities & Equity$500,000 During each of the next three years, Spring reported net income of $70,000 and paid dividends of $20,000. On January 1, 20X4, Petunia sold 3,000 shares of Spring's $5 par value shares for $90,000 in cash. Petunia used the fully adjusted equity method in
accounting for its ownership of Spring Company.Based on the preceding information, what was the balance in the investment account reported by Petunia on January 1, 20X4, before its sale of shares?
A. $450,000
B. $500,000
C. $360,000
D. $486,000
Answer: A
You might also like to view...
During the 2008 financial crisis, the dollar ________ in nominal terms.
A. appreciated sharply B. appreciated slightly C. depreciated slightly D. depreciated sharply
______, when used in the right way, could actually support intrinsic or inner motivation.
A. Social motivation B. Extrinsic motivation C. Fear motivation D. Achievement motivation
In practice, most companies face complex situations. In these cases, a spreadsheet can help in preparing the statement of cash flows
Indicate whether the statement is true or false
A typical project stays within functional and organizational boundaries
Indicate whether the statement is true or false