Pawn Corporation acquired 70 percent of Shop Corporation's voting stock on January 1, 20X2, for $416,500. The fair value of the noncontrolling interest was $178,500 at the date of acquisition. Shop reported common stock outstanding of $200,000 and retained earnings of $350,000. The differential is assigned to buildings with an expected life of 15 years at the date of acquisition.On December 31, 20X4, Pawn had $25,000 of unrealized profits on its books from inventory sales to Shop, and Shop had $40,000 of unrealized profit on its books from inventory sales to Pawn. All inventory held at December 31, 20X4, was sold during 20X5.On December 31, 20X5, Pawn had $14,000 of unrealized profit on its books from inventory sales to Shop, and Shop had unrealized profit on its books of $55,000 from inventory sales to Pawn.Pawn reported income from its separate operations (excluding income on its investment in Shop and amortization of purchase differential) of $118,000 in 20X5, and Shop reported net income of $65,000.**Required:**Compute consolidated net income and income assigned to the controlling interest in the 20X5 consolidated income statement.**Table:**| | ||----------------------------------------------------|-------------------|| Consolidated net income | || Income assigned to the controlling interest | |**Explanation of Table:**The table is a template to calculate the consolidated net income for Pawn Corporation, as well as the income assigned to the controlling interest for the year 20X5. The actual numerical figures still need to be calculated based on the provided financial information.

The question is based on the concept of Financial Accounting.

Answered: Pawn Corporation acquired 70 percent 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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Lucky's acquires Waterview, Inc., by issuing 40,000 shares of $1 par common stock with a market price of $25 per share on the acquisition date and paying $125,000 cash. The assets and liabilities on Waterview's balance sheet were valued at fair values except equipment that was undervalued by $300,000. There was also an unrecorded patent valued at $40,000, as well as an unrecorded trademark valued at $75,000. In addition, the agreement provided for additional consideration, valued at $60,000, if certain earnings targets were met. The pre-acquisition balance sheets for the two companies at acquisition date are presented below. Lucky's Waterview $ 300,000 250,000 Cash Accounts receivable Inventory Property, plant, and equipment Accounts payable Salaries and taxes payable Notes payable Common stock Additional paid-in capital Retained earnings Compute the consolidated balance in Cash. Select one: O O O A. $435,000 B. $475,000 C. $560,000 D. $300,000 254,000 2,300,000 $3,104,000 $ 260,000…
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