On January 1, 20X8, Polo Corporation acquired 75 percent of Stallion Company's voting common stock for $300,000. At the time of the combination, Stallion reported common stock outstanding of $200,000 and retained earnings of $150,000, and the fair value of the noncontrolling interest was $100,000. The book value of Stallion's net assets approximated market value except for patents that had a market value of $50,000 more than their book value. The patents had a remaining economic life of ten years at the date of the business combination. Stallion reported net income of $40,000 and paid dividends of $10,000 during 20X8.Based on the preceding information, which of the following is a consolidating entry needed to prepare a full set of consolidated financial statements at December 31,

Question

20X8: A) Common Stock200,000 Retained Earnings150,000 Income from Stallion Co.40,000 Dividends declared 10,000Investment in Stallion Co. 285,000NCI in NA of Stallion Co. 95,000 B) Depreciation Expense5,000 Income from Stallion Co. 4,000NCI in NI of Stallion Co. 1,000 C) Common Stock200,000 Retained Earnings150,000 Income from Stallion Co.30,000 NCI in NI of Stallion Co.10,000 Dividends declared 10,000Investment in Stallion Co. 285,000NCI in NA of Stallion Co. 95,000D) Patents50,000 Accumulated Depreciation 10,000Investment in Stallion Co. 30,000NCI in NA of Stallion Co. 10,000

A. Choice A
B. Choice B
C. Choice C
D. Choice D

Answer 1

Answer: C