QUESTION 24On January 3, 20X9, Pleat Company acquired 80 percent of Stitch Corporation's common stock for $344,000 in cash. At the acquisition date, the book values and fair values of Stitch's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Stitch. The stockholders' equity accounts of the two companies at the acquisition date are: PleatStitchCommon Stock ($5 par value)$500,000 $200,000 Additional Paid-In Capital 300,000 80,000 Retained Earnings 350,000 150,000 Total Stockholders' Equity$1,150,000 $430,000 Noncontrolling interest was assigned income of $11,000 in Pleat's consolidated income statement for 20X9.Based on the preceding information, what will be the amount of net income reported by Stitch Corporation in 20X9? $44,000 $66,000 $36,000 $55,000

The non controlling interest is the share of minority holding dhares less than 50%.Pleat's share =80% Stitch (Non - controlling) = 20% Non controlling income assigned = $11,000 Total income reported by Stitch corporation = 11,000 / 20% = $55,000 Hence, option d. $55,000 is correct.

Answered: On January 3, 20X9, Pleat Company…

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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QUESTION 24

On January 3, 20X9, Pleat Company acquired 80 percent of Stitch Corporation's common stock for $344,000 in cash. At the acquisition date, the book values and fair values of Stitch's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Stitch. The stockholders' equity accounts of the two companies at the acquisition date are:

	Pleat	Stitch
Common Stock ($5 par value)	$	500,000	$	200,000
Additional Paid-In Capital		300,000		80,000
Retained Earnings		350,000		150,000
Total Stockholders' Equity	$	1,150,000	$	430,000

Noncontrolling interest was assigned income of $11,000 in Pleat's consolidated income statement for 20X9.

Based on the preceding information, what will be the amount of net income reported by Stitch Corporation in 20X9?

		$44,000
		$66,000
		$36,000
		$55,000

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