On January 3,2009,Redding Company acquired 80 percent of Frazer Corporation's common stock for $344,000 in cash.At the acquisition date,the book values and fair values of Frazer's assets and liabilities were equal,and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Frazer.The stockholders' equity accounts of the two companies at the acquisition date are:
Noncontrolling interest was assigned income of $11,000 in Redding's consolidated income statement for 2009.

-Based on the preceding information,what will be the amount of net income reported by Frazer Corporation in 2009?
A)$44,000
B)$55,000
C)$66,000
D)$36,000

Question

On January 3,2009,Redding Company acquired 80 percent of Frazer Corporation's common stock for $344,000 in cash.At the acquisition date,the book values and fair values of Frazer's assets and liabilities were equal,and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Frazer.The stockholders' equity accounts of the two companies at the acquisition date are:
Noncontrolling interest was assigned income of $11,000 in Redding's consolidated income statement for 2009.
 
-Based on the preceding information,what will be the amount of net income reported by Frazer Corporation in 2009?
A)$44,000 
B)$55,000 
C)$66,000 
D)$36,000

Quizplus · Accepted Answer

Since Redding Company acquired 80 percent of Frazer Corporation's common stock, it has a controlling interest in Frazer Corporation. Therefore, the consolidated income statement will combine the net income of both companies. 
We know that the noncontrolling interest was assigned income of $11,000, which means that the net income of Frazer Corporation was $55,000 (80% of net income). 
Thus, the correct answer is B) $55,000.

On January 3,2009,Redding Company Acquired 80 Percent of Frazer Corporation's