Protective Corporation Acquired 70 Percent of the Common Shares and 60

question 11

Multiple Choice

Protective Corporation acquired 70 percent of the common shares and 60 percent of the preferred shares of Safety Corporation at underlying book value on January 1,20X6.At that date,the fair value of the noncontrolling interest in Safety's common stock was equal to 30 percent of the book value of its common stock.Safety's balance sheet at the time of acquisition contained the following balances:
The preferred shares are cumulative and have an 8 percent annual dividend rate and are three years in arrears on January 1,20X6.All of the $10 par value preferred shares are callable at $12 per share.During 20X6,Safety reported net income of $80,000 and paid no dividends.
-Based on the information provided,what is the book value of the common stock on January 1,20X6?

• A)$390,000
• B)$420,000
• C)$446,000
• D)$490,000

---

Definitions:

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, which was developed by B.F. Skinner to study behavior modification.

Biological Response

A physiological or biochemical reaction of an organism to a specific stimulus, including responses to environmental changes, stress, and diseases.

Functional Magnetic Resonance Imaging

A neuroimaging procedure that measures brain activity by detecting changes associated with blood flow.

Positron Emission Tomography

A functional imaging technique that uses radioactive substances to visualize and measure changes in metabolic processes, and in other physiological activities including blood flow, regional chemical composition, and absorption.