Presented Below Are the Balance Sheets of Blanco,Inc On January 1,2X13,Stalle Company Acquired 70% of the Outstanding Common

question 4

Multiple Choice

Presented below are the balance sheets of Blanco,Inc.and Stalle Company at January 1,2X13: $\begin{array}{l}\begin{array} { l } &&\text { Dental Works} & &\text { Stalle Company}\\&&\text { Balance Sheet} & &\text { Balance Sheet}\\&&\text { january 1, 2X13} & &\text { january \( 1,2 \times 13 \) }\\\end{array}\\\begin{array} { l } \text { Cash } & \$ 35 \\\text { Net Fixed Assets } &265\\\text { Total Assets } & \$ 300\\\end{array}\begin{array} { l } \text { Cash } & \$250 \\\text { Net Fixed Assets } & \underline{450} \\\text { Total Assets } & \$ 700 \\\end{array}\end{array}$
$\begin{array}{llll}\text { Accounts Payable } & \$ 30 & \text { Accounts Payable } & \$ 90 \\\text { Long-term Bonds Pay. } & 100 & \text { Long-term Bonds Pay. } & 200 \\\text { Stockholders' Equity } & \underline{170} & \text { Equity } & \underline{410} \\ \text { Total Liab. \& Equity } & \$ 300 & \text { Total Liab. \& Equity } & \$ 700 \\\end{array}$ On January 1,2X13,Stalle Company acquired 70% of the outstanding common stock of Blanco,Inc.,for $119 in cash.Assume the book value of Blanco's assets and liabilities equals the market value.
If Blanco,Inc.,generated net income during 2X13 of $10,and none of the income was the result of intercompany sales,what journal entry would Stalle Company make to reflect this event?

• A)No journal entry is necessary.
• B)\(\begin{array}{lcc}
• \text { Investment in Blanco, Inc. } & 7 & \\
• \quad \text { Investment Revenue } & & 7 \\
• \end{array}\)
• C)\(\begin{array}{lccc}
• \text { Investment in Blanco, Inc. } & 7 & \\
• \text { Noncontrolling Interest } & 3 & \\
• \quad \text { Investment Revenue } & & 10 \\
• \end{array}\)
• D)\(\begin{array}{lccc}
• \text { Investment in Blanco, Inc. } & 10 & \\
• \quad \text { Investment Revenue } & & 10 \\
• \end{array}\)
• E)\(\begin{array}{lccc}
• \text { Investmentin Blanco, Inc. } & 10 & \\
• \quad \text { Investment Revenue } & & 7 \\
• \quad \text { Noncontrolling Interest } &&3
• \end{array}\)

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