Paris, Inc

question 59

Multiple Choice

Paris, Inc. owns 80 percent of the voting stock of Stance, Inc. The excess total fair value over book value was $75,000. Stance holds 10 percent of the voting stock of Paris. The payment for that investment was in excess of book value and fair value by $15,000. Any excess fair value is assigned to trademarks to be amortized over a 10-year period. During the current year, Paris reported operating income of $200,000 and dividend income from Stance of $20,000. At the same time, Stance reported operating income of $40,000 and dividend income from Paris of $5,000.
-What will be reported as the noncontrolling interest in Stance's net income?

• A) $6,500.
• B) $8,000.
• C) $9,000.
• D) $7,500.
• E) $1,000.

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Definitions:

Equity Premium Puzzle

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Survivorship Bias

A bias that occurs when analyzing performance or characteristics by overlooking failures or non-survivors, leading to overly optimistic or skewed outcomes.

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