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    Noncontrolling interest: David Company acquired 60 percent

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    David Company acquired 60 percent of Mark Company for $300,000 when Mark's book value was $400,000. On that date, Mark had equipment (with a 10-year life) that was undervalued in the financial records by $60,000. Also, buildings (with a 20-year life) were undervalued by $40,000. Two years later, the following figures are reported by these two companies (stockholders' equity accounts have been omitted).

    Mark
    David Mark Company
    company company Fair Market
    Book Value Book Value value
    Current assets . . . . . . . . . . . . . . . . $ 620,000 300,000 320,000
    Equipment . . . . . . . . . . . . . . . . . . . 260,000 200,000 280,000
    Buildings . . . . . . . . . . . . . . . . . . . . . 410,000 150,000 150,000
    Liabilities . . . . . . . . . . . . . . . . . . . . . (390000) (120,000) (120,000)
    Revenues . . . . . . . . . . . . . . . . . . . . (900,000) (400,000)
    Expenses . . . . . . . . . . . . . . . . . . . . . 500,000 300,000
    Investment income . . . . . . . . . . . . . not given

    13. What is the noncontrolling interest's share of the subsidiary's income and what is the ending balance
    of the noncontrolling interest in the subsidiary?
    a. $42,000 and $252,000
    b. $40,000 and $212,000
    c. $38,080 and $208,160
    d. $35,200 and $207,200

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    https://brainmass.com/business/accounting/noncontrolling-interest-david-company-acquired-60-percent-73844

    Solution Preview

    The non-controlling interest is 40%, so income share is ...

    Solution Summary

    Answers a conceptual question on non-controlling interest.

    $2.19

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