Femur Co Acquired 70% of the Voting Common Stock of Harbor

question 22

Multiple Choice

Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2014. During 2014, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of excess cost allocations totaled $60,000 in 2014.
The non-controlling interest's share of the earnings of Harbor Corp. is calculated to be

• A) $132,000.
• B) $150,000.
• C) $168,000.
• D) $160,000.
• E) $0.

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Definitions:

NPV

Net Present Value, a financial metric that calculates the present value of all cash flows associated with an investment, including both inflows and outflows, discounted at the project's cost of capital.

Present-Value Equivalent

A calculated amount representing the current value of a future sum of money or stream of cash flows, given a specified rate of return.

Cost of Funds

The interest rate that banks and other financial institutions pay for the use of funds deposited in their accounts by savers or obtained from other external sources.

ROI

Return on Investment, a financial metric used to measure the efficiency or profitability of an investment.