Use the Following Information to Answer Questions
Pentagon Company

question 15

Multiple Choice

Use the following information to answer Questions
Pentagon Company acquired 90% of Smoker Company's common stock for $1,300,000 and 40% of its preferred stock for $300,000.On January 1, 2013, the date of acquisition, the companies reported the following account balances: $\begin{array}{lrr}&\text { Pentagon Company } & \text { Smoker Company } \\\text { Preferred stock, } \$ 100 \text { par value } & \$ 800,000 & \$ 600,000 \\\text { Common stock, } \$ 10 \text { par value } & 2,000,000 & 1,000,000 \\\text { Other contributed capital } & 320,000 & 230,000 \\\text { Retained eamings } & 350,000 & 180,000 \\\text { Total stockholders' equity } & \$ 3,470,000 & \$ 2,010,000\end{array}$ The preferred stock is 10%, cumulative, nonparticipating, and has a liquidation value equal to 102% of par value.Dividends were not paid during 2012.During 2013, Smoker Company reported net income of $200,000 and declared and paid cash dividends in the amount of $120,000.
-Noncontrolling interest in the 2013 reported net income of Smoker Company is

• A)$50,000.
• B)$20,000.
• C)$80,000.
• D)$56,000.
• E)none of these.

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Definitions:

Tacit Collusion

An unspoken, non-explicit agreement among competitors to avoid competitive practices like price wars, often difficult to detect and regulate.

Price Extortion

Price extortion occurs when a seller significantly increases the price of goods or services to a level much higher than is considered reasonable or fair, often in situations where consumers have limited choices or during emergencies.

Dominant Strategy

In game theory, a strategy that is best for a player in a game regardless of the strategies chosen by the other players.

Pricing Strategy

A plan or method implemented by a company to price its products or services to attract consumers while maximizing profit.