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

question 37

Multiple Choice

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

Pascoe Corporation paid $450,000 for a 90% interest in Sarabet Corporation on January 1, 2014, when Sarabet's stockholders' equity consisted of $250,000 Common Stock and $50,000 Retained Earnings. The book values and fair values of Sarabet's assets and liabilities were equal when Pascoe acquired its interest.

The separate net incomes (excluding investment income) of Pascoe and Sarabet for 2014 were $600,000 and $100,000, respectively. Dividends declared and paid during 2014 were $250,000 for Pascoe and $50,000 for Sarabet. Pascoe uses the entity theory in consolidating its financial statements with those of Sarabet.

-Noncontrolling interest share was reported in the 2014 consolidated income statement at

• A)$5,000.
• B)$6,000.
• C)$8,000.
• D)$10,000.

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Definitions:

Consumer Surplus

The divergence between the expected payment by consumers for a product or service and the actual payment made.

Producer Surplus

The difference between the amount producers are willing and able to supply goods for versus the amount they actually receive due to market prices.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net gain to society from the production and consumption of goods and services.

Tariff Revenue

Income that a government collects from imposing duties on imported goods.