Pell Company Acquires 80% of Demers Company for $500,000 on January

question 46

Multiple Choice

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2010. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows: $\begin{array}{lrrr}&2010&2011&2012\\\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \\\text { Dividends } & 40,000 & 50,000 & 60,000\end{array}$ Assume the equity method is applied.
-Compute the noncontrolling interest in the net income of Demers at December 31, 2010.

• A) $20,000.
• B) $12,000.
• C) $18,600.
• D) $10,600.
• E) $14,400.

---

Definitions:

Staple Removal

The process of taking out surgical staples from a wound after it has sufficiently healed.

Steri-Strip

Thin, adhesive strips used to close small wounds or incisions, often used as an alternative to sutures or staples.

Pressure Ulcer

An injury to skin and underlying tissue resulting from prolonged pressure on the skin, commonly seen on bony areas.

Irrigation Pressures

The pressure applied during irrigation to clean out wounds or body cavities, crucial for preventing infection and promoting healing.