Chapter 9, Problem 9.1.2E

Multiple-Choice Questions on Preferred Stock Ownership

Blank Corporation prepared the following summarized balance sheet on January 1, 20X1:

Shepard Company acquires 80 percent of Blank Corporation’s common stock on January 1, 20X1, for $80,000. At that date, the fair value of the common shares held by the noncontrolling interest is $20,000.

Required

Select the correct answer for each of the following questions.

In addition to the common shares, Shepard Company purchases 70 percent of Blank’s preferred shares for $21,000. The amount reported as noncontrolling interest in Shepard’s consolidated balance sheet is

1. $9,000.
2. $20,000.
3. $29,000.
4. $50,000.