On January 1,20X8,Potter Corporation acquired 90 percent of Shoemaker Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Shoemaker at that date.Potter uses the fully adjusted equity method in accounting for its ownership of Shoemaker.On December 31,20X9,the trial balances of the two companies are as follows:

-Based on the preceding information,what amount would be reported as total stockholders' equity in the consolidated balance sheet at December 31,20X9?
A)$412,000
B)$394,000
C)$542,000
D)$348,000

Question

On January 1,20X8,Potter Corporation acquired 90 percent of Shoemaker Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Shoemaker at that date.Potter uses the fully adjusted equity method in accounting for its ownership of Shoemaker.On December 31,20X9,the trial balances of the two companies are as follows:
 
-Based on the preceding information,what amount would be reported as total stockholders' equity in the consolidated balance sheet at December 31,20X9?
A)$412,000 
B)$394,000 
C)$542,000 
D)$348,000

Quizplus · Accepted Answer

The correct amount for total stockholders' equity in the consolidated balance sheet is $412,000. This is determined by consolidating the financial information provided, which includes combining the parent company's equity with any adjustments due to the consolidation process such as eliminating intercompany transactions, minority interests, and any changes in the equity of subsidiaries that the parent company owns.

On January 1,20X8,Potter Corporation Acquired 90 Percent of Shoemaker Company's