On January 1, 20X1, Paris Ltd. paid $600,000 for its 75% interest in the Scott Company when Scott had total equity of $550,000. Any excess of cost over book value was attributed to equipment with a 10-year life. On January 1, 20X3, Scott Company had the following stockholders' equity: On January 2, 20X3, Scott Company sold 2,500 additional shares of stock for $90 each in a private offering to noncontrolling shareholders. As a result of this sale, which of the following changes would appear in the 20X3 consolidated statements?
A)$7,500 gain
B)$37,500 loss
C)$7,500 increase in controlling paid-in capital
D)$37,500 decrease in controlling paid-in capital

Question

On January 1, 20X1, Paris Ltd. paid $600,000 for its 75% interest in the Scott Company when Scott had total equity of $550,000. Any excess of cost over book value was attributed to equipment with a 10-year life. On January 1, 20X3, Scott Company had the following stockholders' equity:  On January 2, 20X3, Scott Company sold 2,500 additional shares of stock for $90 each in a private offering to noncontrolling shareholders. As a result of this sale, which of the following changes would appear in the 20X3 consolidated statements?
A)$7,500 gain 
B)$37,500 loss 
C)$7,500 increase in controlling paid-in capital 
D)$37,500 decrease in controlling paid-in capital

Quizplus · Accepted Answer

11eb11de_92e7_0f15_ad38_854826d1e49f_TB2014_00 
 11eb11de_92e7_3626_ad38_f508b61a1a29_TB2014_00 *7,500 / (10,000 + 2,500) = 60%