Question: Wally 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:
Assets $700,000
Liabilities $110,000
Preferred Stock 100,000
Common Stock 200,000
Retained Earnings 290,000
Total Assets $700,000
Total Liabilities and Equities $700,000
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.
1. Based on the preceding information, what will be the amount of income to be assigned to the noncontrolling interest in the 20X6 consolidated income statement?
2. Based on the preceding information, the amount assigned to the noncontrolling stockholders' share of preferred stock interest in the preparation of a consolidated balance sheet on January 1, 20X6 is
3. Based on the preceding information, what is the portion of Safety's retained earnings assignable to its preferred shareholders on January 1, 20X6?
4. Based on the information provided, what is the book value of the common stock on January 1, 20X6?
5. Based on the information provided, what amount will be reported as the noncontrolling interest in the consolidated balance sheet on January 1, 20X6?