On January 3, 20X9, Jane Company acquired 75 percent of Miller Company's outstanding common stock for cash. The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Miller Company's net assets at the date of acquisition. Selected balance sheet data at December 31, 20X9, are as follows:

-Based on the preceding information,what amount will Jane Company report as common stock outstanding in its consolidated balance sheet at December 31,20X9?
A) $120,000
B) $180,000
C) $156,000
D) $264,000

Question

On January 3, 20X9, Jane Company acquired 75 percent of Miller Company's outstanding common stock for cash. The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Miller Company's net assets at the date of acquisition. Selected balance sheet data at December 31, 20X9, are as follows:
 
-Based on the preceding information,what amount will Jane Company report as common stock outstanding in its consolidated balance sheet at December 31,20X9?
A) $120,000 
B) $180,000 
C) $156,000 
D) $264,000

Quizplus · Accepted Answer

Since Jane Company acquired 75% of Miller Company's outstanding common stock, Jane Company owns 75% of Miller's total common stock. Therefore, the common stock outstanding of Miller Company is equal to the common stock outstanding held by Jane Company.
Common Stock Outstanding of Miller Company = 360,000 * 75% = $270,000
And since Jane Company only owns 75% of Miller Company, the non-controlling interest owns the remaining 25% of Miller Company's common stock.
Non-controlling Interest in Miller Company = 360,000 * 25% = $90,000
Therefore, the common stock outstanding in Jane Company's consolidated balance sheet will be the total common stock outstanding of Miller Company (which is owned by both Jane Company and the non-controlling interest).
Common Stock Outstanding in Jane Company's Consolidated Balance Sheet= $270,000 + $90,000 = $360,000
However, the question only asks for the amount of common stock outstanding owned by Jane Company, which is 75% of $360,000.
Therefore, the correct answer is A) $120,000.

On January 3, 20X9, Jane Company Acquired 75 Percent of Miller