On January 1 of the year of acquisition, Ashley Incorporated pays $300,000 for 60% of Marea Company's outstanding common stock in a purchase transaction. Mareareported common stock on that date of $250,000 with retained earnings of $100,000. Equipment, which had a ten-year remaining life, was undervalued in Marea'sfinancial records by $20,000. During the due diligence process, it was discovered that Marea had a patent that was not on the books, but had a market value of $50,000.The patent has a useful life of 10 years. Marea earns income and pays cash dividends as follows: Year Net Income Dividends Paid Acquisition year $ 40,000 $ 15,000 Firstyear $ 60,000 $ 20,000 Second year $ 90,000 $ 30,000 On the balance sheet at the end of the second year, what amount should be reported as noncontrolling interest inMarea Company at the end of the second year? Multiple Choice $250,000 $241,600 $276,000 $341,600

$241,600,Explanation:Here's how we calculate the noncontrolling interest in Marea Company at the end…

Answered: On January 1 of the year of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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