Use the Following Information to Answer the Question(s) Below

question 28

Multiple Choice

Use the following information to answer the question(s) below.

Pahm Corporation owns 80% of the outstanding voting common stock of Abussi Corporation, which was purchased for $60,000 over Abussi's book value. The excess purchase price was attributable to goodwill. Abussi Corporation owns 60% of the outstanding common stock of Badock Corporation, which was purchased at book value. The separate net incomes of Pahm, Abussi, and Badock (excluding investment income) for the year are $200,000, $240,000, and $260,000, respectively. There were no fair value/book value differences in the assets and liabilities of Pahm, Abussi and Badock.


-Controlling interest share of consolidated net income for the current year is

• A)$504,800.
• B)$516,800.
• C)$545,200.
• D)$557,200.

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Definitions:

Treasury Bills

Short-term government securities with maturities ranging from a few days to 52 weeks, sold at a discount from their face value.

Intrinsic Value

The inherent or true value of an asset, investment, or company, based on underlying perceptions of its worth.

January Call

An options contract that gives the holder the right to buy the underlying asset at a specified price within January.