Reference no: EM132508677

On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

                                                     Pumpkin                  Spice

Cash                                     $50,000                     $15,000

Accounts Receivable                70,000                         25,000

Inventory                                30,000                            20,000

Land                                           150,000                        80,000

Buildings and Equipment                     250,000                     200,000

Less:

Accumulated Depreciation                  (70,000)                         (20,000)

Investment in Spice Co.                         210,000

Total Assets                                           $690,000                      $320,000

Accounts Payable                                       $40,000                            $10,000

Bonds Payable                                            150,000                           40,000

Common Stock                                                300,000                           90,000

Retained Earnings                                          200,000                           180,000

Total Liabilities and Equity                                 $690,000                    $320,000

• At the date of the business combination, the book values of Spice's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000.

Question 1: Based on the preceding information, what amount will be reported as noncontrolling interest in the consolidated balance sheet prepared immediately after the business combination?

Multiple Choice

$0
$81,000
$90,000
$96,000