Please answer the question step by step. On January 1, 20X9,


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Please answer the question step by step. On January 1, 20X9, Company A acquired 80 percent of the common stock and 60 percent of the preferred stock of Company B, for $400,000 and $60,000, respectively. At the time of acquisition, the fair value of the common shares of Company B held by the noncontrolling interest was $100,000. Company B’s balance sheet contained the following balances: Preferred Stock ($5 par value) $100,000 Common Stock ($10 par value) 200,000 Retained Earnings 300,000 Total Stockholders’ Equity $600,000 For the year ended December 31, 20X9, Company B reported net income of $100,000 and paid dividends of $40,000. The preferred stock is cumulative and pays an annual dividend of 10 percent. 1. Based on the preceding information, what will be the equity method income reported by Company A from its investment in Company B during 20X9? A. $32,000 B. $30,000 C. $72,000 D. $48,000 2. Based on the preceding information, the eliminating entry to prepare the consolidated financial statements for Company A as of December 31, 20X9 will include a credit to Investment in Company B—Common Stock for: A. 506,000 B. 440,000 C. 400,000 D. 500,000 3. Based on the preceding information, the eliminating entry to prepare the consolidated financial statements for Company A as of December 31, 20X9 will include a credit to noncontrolling interest in net income of Company B for: A. 140,000 B. 154,000 C. 152,000 D. 150,000 Eva-R
posted a question · Dec 04, 2013 at 11:37pm

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