On January 3, 20x9, Redding Company acquired controlling interest in Frazer orpo

Question

On January 3, 20x9, Redding Company acquired controlling interest in Frazer orporation's common stock for $344.000 cash. At the acquisition date, the book alues and fair values of Frazer's assets and liabilities were equal. The stockholders equity accounts of the two companies at the acquisition date are: Redding Frazer Common Stock ($5 par value) Additional Paid-In Capital Retained Earnings $500,000 300,000 350,000 $200,000 80,000 1 50,000 Total Stockholders Equity $1,150.000 S430.000 Based on the preceding information, which of the following can we conclu de? Redding Company acquired 80 percent of Frazer's common stock. The consolidated balance sheet immediately after acquisition will report retained earnings of $150,000 The acquisition resulted in a total of $86,000 differential. The consolidated balance sheet after acquisition reported NCI in the Net Assets of Frazer of $86,000. I. II. Ill. IV. A) I only B) I, Il and IlI C) I and IIl D) I and IV

Explanation / Answer

D.I and IV

total value of frazer equity = $430,000.

Redding company paid $344,000 to acquire interest

=>percentage of control = $344,000 / 430,000 =>0.80 =>80%.....(so I is true).

Non controlling interest = total equity - redding company interest

=>$430,000 - 344,000 =>$86,000.....(so IV is correct).

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