Pine Company purchased a 60% interest in the Scent Company on January 1, 2016 for $360,000.On that date, the stockholders' equity of Scent Company was $450,000.Any excess cost on 1/1/16 was attributable to goodwill.Pine purchased another 20% interest on January 1, 2019 for $200,000.On January 1, 2019, Scent Company's stockholders' equity was $700,000, the entire increase due to retained earnings.As part of the consolidation process, the excess of the price paid over book on the new block of shares is treated as
A)additional goodwill
B)a loss on acquisition of additional subsidiary shares
C)an increase to Pine's Investment in Scent account
D)a reduction in parent's paid-in capital in excess of par

Question

Pine Company purchased a 60% interest in the Scent Company on January 1, 2016 for $360,000.On that date, the stockholders' equity of Scent Company was $450,000.Any excess cost on 1/1/16 was attributable to goodwill.Pine purchased another 20% interest on January 1, 2019 for $200,000.On January 1, 2019, Scent Company's stockholders' equity was $700,000, the entire increase due to retained earnings.As part of the consolidation process, the excess of the price paid over book on the new block of shares is treated as
A)​additional goodwill
B)​a loss on acquisition of additional subsidiary shares
C)​an increase to Pine's Investment in Scent account
D)​a reduction in parent's paid-in capital in excess of par

Quizplus · Accepted Answer

The Answer of Pine Company purchased a 60% interest in the Scent Company on January 1, 2016 for $360,000.On that date, the stockholders' equity of Scent Company was $450,000.Any excess cost on 1/1/16 was attributable to goodwill.Pine purchased another 20% interest on January 1, 2019 for $200,000.On January 1, 2019, Scent Company's stockholders' equity was $700,000, the entire increase due to retained earnings.As part of the consolidation process, the excess of the price paid over book on the new block of shares is treated as
A)​additional goodwill
B)​a loss on acquisition of additional subsidiary shares
C)​an increase to Pine's Investment in Scent account
D)​a reduction in parent's paid-in capital in excess of par

Pine Company Purchased a 60% Interest in the Scent Company