On January 1, 20X8, Parsley Corporation acquired 75 percent of Sage Company's voting common stock for $90,000 cash. At that date, the fair value of the noncontrolling interest was $30,000. Sage's balance sheet at the date of acquisition contained the following balances: Sage CompanyBalance SheetJanuary 1, 20X8Cash$10,000 Accounts Payable$35,000 Accounts Receivable 20,000 Notes Payable 50,000 Land 40,000 Common Stock 100,000 Building and Equipment 165,000 Additional Paid-In Capital 20,000 Less: Accumulated Depreciation (50,000)Retained Earnings (20,000) Total Assets$185,000 Total Liabilities and Equity$185,000 At the date of acquisition, the reported book values of Sage's assets and liabilities approximated fair value. Consolidating entries are being made to

Question

prepare a consolidated balance sheet immediately following the business combination.Based on the preceding information, in the entry to eliminate the investment balance,

A. additional paid-in-capital will be credited for $20,000.
B. retained earnings will be credited for $10,000.
C. noncontrolling interest will be debited for 30,000.
D. retained earnings will be credited for $20,000.

Answer 1

Answer: D