Company P Purchased an 80% Interest in the Company S

question 4

Multiple Choice

Company P purchased an 80% interest in the Company S on January 1, 2016, for $600,000.Any excess of cost is attributed to the Company's building with a 20-year life.The equity balances of Company S are as follows: ?

$$\begin{array} { l r r } & \text { January } 1,2016 & \text { December } 31,2019 \\\text { Common stock, } \$ 10 \text { par } & \$ 100,000 & \$ 140,000 \\ \text { Other paid-in capital } & 200,000 & 280,000 \\\text { Retained earnings }& 250,000 & 450,000\end{array}$$
The only change in paid-in capital is a result of a 40% stock dividend paid in 2018.The cost to simple equity conversion to bring the investment account to its December 31, 2019, balance is ____.

• A)$30,000
• B)$136,000
• C)$160,000
• D)$256,000

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Definitions:

Psychotherapy

A form of treatment for mental health issues involving psychological techniques, such as talking therapy, aimed at understanding and changing behavior.

Shock Therapy

A form of psychiatric treatment involving electric shocks to induce seizures, formally known as Electroconvulsive Therapy (ECT).

Behavioral Therapy

A treatment approach that focuses on modifying negative behaviors and thoughts in order to solve psychological problems.

Chronic Condition

A long-term health condition that requires ongoing management and can affect a person's everyday life.