Pardo Corporation Paid $140,000 for a 70% Interest in Spedeal

question 19

Multiple Choice

Pardo Corporation paid $140,000 for a 70% interest in Spedeal Inc.on January 1,2011,when Spedeal had Capital Stock of $50,000 and Retained Earnings of $100,000.Fair values of identifiable net assets were the same as recorded book values.During 2011,Spedeal had income of $40,000,declared dividends of $15,000,and paid $10,000 of dividends.On December 31,2011,the consolidated financial statements will show

• A)investment in Spedeal account of $170,000.
• B)investment in Spedeal account of $165,000.
• C)consolidated goodwill of $50,000.
• D)consolidated dividends receivable of $5,000.

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Definitions:

Voluntary Response

A behavioral or physical reaction that occurs as a result of a voluntary action in response to a stimulus.

Secondary Reinforcers

Stimuli that become reinforcing through their association with primary reinforcers; they do not satisfy biological needs but are learned, such as money or praise.

Primary Reinforcers

Fundamental stimuli that satisfy basic survival needs and are innately satisfying without prior learning.

Physical Needs

Essential requirements for human survival, such as food, water, shelter, and sleep.