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Number four I is $95,000 but I want to know why is it. I have also seen some examples and want to know why people divide the common stock $956,000 by the acquired 80 percent instead of multiplying it.

Multiple-Cholce Questions on Consolidation (AICPA Adapted) Select the correct answer for each of the following qaestions 1. A 70 pencent owned subsidiary compuny declares and pays a cash dividend. What effect doss Mned rlanined,cmings and nonconsoling interest balances in the purent . No effect on either retained earnings or No effect on retained earnings and . decrease in noncontrolling merest. c. Decreases in both retained carnings and noncontrolling interest d. A decrease in retained earnings and no effect on or interest. noncontrolling interesM 2. How is the portion of consolidated earnings to be assigned to the noncontrolling interest in consolidated financial statements determined a. The parent's net income is subtracted from the subsidiary's net income to determine the b. The subsidiary's net income is extended to the noncontrolling interest c. The amount of the subsidiary's earnings recognized for consolidation parposes is multiplied by the noncontrolling interest's percentage of ownership. d. The amount of consolidated earnings on the consolidated worksheets is multiplied by the noncontrolling interest percentage on the balance sheet date. 3. On January 1, 20XS, Post Company acquired an 80 percent investment in Stake On January 1, 20x5, Post's respectively. During 20xS, Post had net income of $200,000, which inc in Stake's earnings, and declared dividends of $50,000; Stake had net income of isition cost was equal to Post's equity in Stake's net assets at that date. uded its equity On January 1. 20X3, Post and Stake had retained earnings of $500,000 and S100,000, $40,000 nsactions and declared dividends of $20,000. There were no other intercompany tra between the parent and subsidiary. On December 31, 20X5, what should the consolidated retained earnings be? a. $650,000 b $666,000 c. $766,000 d $770.000 Note: Items 4 and 5 are based on the following information On January I, 20X8, Ritt Corporation acquired 80 percent of Shaw Corporation's S10 par common stock for $956,000. On this date, the fair value of the noncontrolling interest was $239,000, and the carrying amount of Shaw's net assets was $1,000,000. The fair values of Shaw's identifiable assets and liabilities were the same as their carrying amounts except for plant assets (net) with a remaining life of 20 years, which were S100,000 in excess of the carrying amount. For the year ended December 31, 20x8, Shaw had net income of $190,000 and paid cash dividends totaling $125,000 4 In the January 1, 20X8, consolidated balance sheet, the amount of goodwill reported should be b. $76.000. c. $95,000 d $156,000. 5 In the December 31, 20X8, consolidated balance sheet, the amount of noncontrolling interest reported should be $200,000 $239.000 c $251,000

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