Chapter 9, Problem 9.17.1P

Multiple-Choice Questions on Preferred Stock Ownership

Stacey Corporation owns 80 percent of the common shares and 70 percent of the preferred shares of Upland Company, all purchased at underlying book value on January 1, 20X2. At that date, the fair value of the noncontrolling interest in Upland’s common stock was equal to 20 percent of the book value of its common stock. The balance sheets of Stacey and Upland immediately after the acquisition contained these balances:

The preferred stock issued by Upland pays a 10 percent dividend and is cumulative. For 20X2, Upland reports net income of $30,000 and pays no dividends. Stacey reports income from its separate operations of $100,000 and pays dividends of $40,000 during 20X2.

Required

Select the correct answer for each of the following questions.

Total noncontrolling interest reported in the consolidated balance sheet as of January 1, 20X2, is

1. $30,000.
2. $50,000.
3. $70,000.
4. $80,000.