Tray Co. reported current earnings of $560,000 while paying $56,000 in cash dividends. Sparrish Co. earned $140,000 in net income and distributed $14,000 in dividends.
Tray held a 70% interest in Sparrish for several years, an investment that it originally acquired by transferring consideration equal to the book value of the underlying net assets. Tray used the initial value method to account for these shares.
On January 1, 2011, Sparrish acquired, in the open market, $70,000 of Tray's 8% bonds. The bonds had originally been issued several years ago at 92, reflecting a 10% effective interest rate. On the date of the bond purchase, the book value of the bonds payable was $67,600. Sparrish paid $65,200 based on a 12% effective interest rate over the remaining life of the bonds.
Required:
1. What is the non-controlling interest's share of the subsidiary's net income?
a) $42,000.
b) $37,800.
c) $39,600.
d) $40,070.
e) $44,080.
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Ответ:
Results are below.
Explanation:
The opportunity cost is the amount of money that you won't earn when choosing one option over another. In this case, one option makes you expend money and the other earn money.
Opportunity cost= 12*4 + 25
Opportunity cost= $73
Now, the total cost incorporated what you will expend in Six Flags:
Total cost= 65 + 40 + 73
Total cost= $178