Required Information On January 1, 2022, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Incorporated, for $459,000 cash. The acquisition-date fair value of the noncontrolling Interest was $51,000. At January 1, 2022, Star's net assets had a total carrying amount of $356,000. Equipment (eight-year remaining life) was undervalued on Star's financial records by $63,200. Any remaining excess fair value over book value was attributed to unpatented technology developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $55,300 in 2022 and $63,200 in 2023. Each year since the acquisition, Star has declared a $15,800 dividend. At January 1, 2024, Pride's retained earnings show a $197,500 balance. Selected account balances for the two companies from their separate operations were as follows: Items Pride 2024 Revenues $ 393,500 2024 Expenses 276,600 ssuming that Pride, In Its Internal records, accounts for its Investment in Star using the equity method, what mount of retained earnings would Pride report on Its January 1, 2024, consolidated balance sheet? Multiple Choice $291,600 $251,250 $ 225,200 154,100 $197.500
Required Information On January 1, 2022, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Incorporated, for $459,000 cash. The acquisition-date fair value of the noncontrolling Interest was $51,000. At January 1, 2022, Star's net assets had a total carrying amount of $356,000. Equipment (eight-year remaining life) was undervalued on Star's financial records by $63,200. Any remaining excess fair value over book value was attributed to unpatented technology developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $55,300 in 2022 and $63,200 in 2023. Each year since the acquisition, Star has declared a $15,800 dividend. At January 1, 2024, Pride's retained earnings show a $197,500 balance. Selected account balances for the two companies from their separate operations were as follows: Items Pride 2024 Revenues $ 393,500 2024 Expenses 276,600 ssuming that Pride, In Its Internal records, accounts for its Investment in Star using the equity method, what mount of retained earnings would Pride report on Its January 1, 2024, consolidated balance sheet? Multiple Choice $291,600 $251,250 $ 225,200 154,100 $197.500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vinubhai
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Required Information
On January 1, 2022, Pride Corporation purchased 90 percent of the outstanding voting shares of
Star, Incorporated, for $459,000 cash. The acquisition-date fair value of the noncontrolling
Interest was $51,000. At January 1, 2022, Star's net assets had a total carrying amount of
$356,000. Equipment (eight-year remaining life) was undervalued on Star's financial records by
$63,200. Any remaining excess fair value over book value was attributed to unpatented
technology developed by Star (four-year remaining life), but not recorded on its books. Star
recorded net income of $55,300 in 2022 and $63,200 in 2023. Each year since the acquisition,
Star has declared a $15,800 dividend. At January 1, 2024, Pride's retained earnings show a
$197,500 balance.
Selected account balances for the two companies from their separate operations were as follows:
Star
$ 225, 200
154,100
Items
Pride
2024 Revenues $ 393,500
2024 Expenses 276,600
Assuming that Pride, In Its Internal records, accounts for its Investment in Star using the equity method, what
amount of retained earnings would Pride report on its January 1, 2024, consolidated balance sheet?
Multiple Choice
O
$291,600
$251,250
$197,500
$226,200
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