Reference no: EM132873384

On January 2, 2020, Perry Company purchased 80% of Sonny Company's common stock for 162,000. P 7,500 of the excess is attributable to goodwill and the balance to an equipment with an economic life of ten years. Non-controlling interest is measured at its fair value on date of acquisition.

On the date of acquisition, stockholders' equity of the two companies are as follows:

                                              Perry Company                   Sonny Company
Common stock                              262,500                           60,000
Additional paid-in capital                  90,000                             30,000
Retained earnings                             300,000                                  75,000

On December 31, 2020, Sonny Company reported net income of 26,250 and paid dividends of 9,000 to Perry. Perry reported net income of 80,250 and paid dividends of 34,500. Goodwill had been impaired and should be reported at 1,500 on December 31, 2020.

Question 1: What is the consolidated net income on December 31, 2020?

a. 89,437.50                             c. 94,687.50
b. 90,000                                  d. 88,500

Question 2: What is the consolidated retained earnings attributable to parent's shareholders' equity on December 31, 2020?

a. 440,550                c. 439,500
b. 439,350              d. 519,937.50

Question 3: What is the NCI in net income of Sonny Company on December 31, 2020?

a. 4,687.50                                    c. 4,650
b. 5,250                                       d. 3,450

Question 4: What amount of NCI is to be presented in the consolidated statement of financial position on December 31, 2020?

a. 41,150                    c. 41,700
b. 38,625                    d. 36,375

Question 5: What is the consolidated net income attributable to parent shareholders on December 31, 2020?

a. 84,000                   c. 89,100
b. 85,050                   d. 90,000