Plush Corporation Holds 80 Percent of Scratch Company's Voting Common

question 42

Multiple Choice

Plush Corporation holds 80 percent of Scratch Company's voting common shares,acquired at book values,but none of its preferred shares.At the date of acquisition,the fair value of the noncontrolling interest was equal to 20 percent of the book value of Scratch Company.Summary balance sheets for the companies on December 31,20X8,are as follows:
Neither of the preferred issues is convertible.Plush's preferred pays a 8 percent annual dividend,and Scratch's preferred pays a 12 percent dividend.Scratch reported net income of $30,000 and paid a total of $10,000 of dividends in 20X8.Plush reported income from its separate operations of $70,000 and paid total dividends of $25,000 in 20X8.
-Based on the preceding information,what is the amount of earnings available to common shareholders reported in the consolidated financial statements for the year?

• A)$89,200
• B)$87,000
• C)$91,000
• D)$82,800

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Definitions:

Fear-Evoking Stimulus

An object, event, or situation that induces fear.

Systematic Desensitization

A behavioral therapy technique intended to reduce phobic responses or anxiety through gradual exposure to the feared object or situation combined with relaxation techniques.

Physically Present

Being bodily in a specific location or space, as opposed to being there in thought, via communication technology, or representation.

Anxiety Hierarchy

An anxiety hierarchy is a ranked list of stimuli or situations that provoke anxiety responses, used in therapy to progressively desensitize a person to their fears.