On January 1, 2013, Riney Co. owned 80% of the common stock of Garvin Co. On that date, Garvin's stockholders' equity accounts had the following balances: The balance in Riney's Investment in Garvin Co. account was $552,000, and the non-controlling interest was $138,000. On January 1, 2013, Garvin Co. sold 10,000 shares of previously unissued common stock for $15 per share. Riney did not acquire any of these shares.
What is the balance in Non-controlling Interest in Garvin Co. after the sale of the 10,000 shares of common stock?
A) $138,000.
B) $101,000.
C) $280,000.
D) $230,000.
E) $168,000.

Question

On January 1, 2013, Riney Co. owned 80% of the common stock of Garvin Co. On that date, Garvin's stockholders' equity accounts had the following balances:  The balance in Riney's Investment in Garvin Co. account was $552,000, and the non-controlling interest was $138,000. On January 1, 2013, Garvin Co. sold 10,000 shares of previously unissued common stock for $15 per share. Riney did not acquire any of these shares.
What is the balance in Non-controlling Interest in Garvin Co. after the sale of the 10,000 shares of common stock?
A) $138,000. 
B) $101,000. 
C) $280,000. 
D) $230,000. 
E) $168,000.

Quizplus · Accepted Answer

$250,000/$5 = 50,000 shares × .80 = 40,000 shares owned by parentTotal Equity at Acquisition = $690,000 + Equity Added by Stock Offering (10,000 × $15) $150,000 = Total Equity after Stock Offering $840,000 × 20,000/60,000 = $280,000 Non-Controlling Interest