The Following Data Applies to Questions 1 - 3

question 15

Multiple Choice

The following data applies to Questions 1 - 3:
On January 1, 20X9, Company A acquired 80 percent of the common stock and 60 percent of the preferred stock of Company B, for $400,000 and $60,000, respectively. At the time of acquisition, the fair value of the common shares of Company B held by the noncontrolling interest was $100,000. Company B's balance sheet contained the following balances:
For the year ended December 31, 20X9, Company B reported net income of $100,000 and paid dividends of $40,000. The preferred stock is cumulative and pays an annual dividend of 10 percent.
-Based on the preceding information,the consolidating entry to prepare the consolidated financial statements for Company A as of December 31,20X9 will include a credit to Investment in Company B-Common Stock for:

• A) 506,000
• B) 440,000
• C) 400,000
• D) 500,000

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