Advanced Financial Accounting
Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
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Chapter 9, Problem 9.1.4E

Multiple-Choice Questions on Preferred Stock Ownership

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

Chapter 9, Problem 9.1.4E, Multiple-Choice Questions on Preferred Stock Ownership Blank Corporation prepared the following

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 on January 1, 20X1. Shepard has no preferred shares outstanding. The amount of preferred stock reported in the consolidated balance sheet immediately after the stock purchases is

  1. $0.
  2. $9,000.
  3. $21,000.
  4. $30,000.

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