Protective Corporation acquired 70 percent of the common shares and 60 percent of the preferred shares of Safety Corporation at underlying book value on January 1,20X6.At that date,the fair value of the noncontrolling interest in Safety's common stock was equal to 30 percent of the book value of its common stock.Safety's balance sheet at the time of acquisition contained the following balances:
The preferred shares are cumulative and have an 8 percent annual dividend rate and are three years in arrears on January 1,20X6.All of the $10 par value preferred shares are callable at $12 per share.During 20X6,Safety reported net income of $80,000 and paid no dividends.
-Based on the preceding information,the amount assigned to the noncontrolling stockholders' share of preferred stock interest in the preparation of a consolidated balance sheet on January 1,20X6 is

Question

Protective Corporation acquired 70 percent of the common shares and 60 percent of the preferred shares of Safety Corporation at underlying book value on January 1,20X6.At that date,the fair value of the noncontrolling interest in Safety's common stock was equal to 30 percent of the book value of its common stock.Safety's balance sheet at the time of acquisition contained the following balances:
  The preferred shares are cumulative and have an 8 percent annual dividend rate and are three years in arrears on January 1,20X6.All of the $10 par value preferred shares are callable at $12 per share.During 20X6,Safety reported net income of $80,000 and paid no dividends.
-Based on the preceding information,the amount assigned to the noncontrolling stockholders' share of preferred stock interest in the preparation of a consolidated balance sheet on January 1,20X6 is

Quizplus · Accepted Answer

The noncontrolling stockholders' share of preferred stock interest is equal to the par value of the preferred stock multiplied by the noncontrolling interest percentage. In this case, the par value of the preferred stock is $100,000 and the noncontrolling interest percentage is 48%. Therefore, the noncontrolling stockholders' share of preferred stock interest is $100,000 * 48% = $48,000.

Protective Corporation Acquired 70 Percent of the Common Shares and 60