A Parent Acquires 70% of a Subsidiary's Common Stock and 60

Multiple Choice

A parent acquires 70% of a subsidiary's common stock and 60 percent of its preferred stock. The preferred stock is noncumulative. The current year's dividend was paid. How is the non-controlling interest in the subsidiary's net income assigned?

A) Income is assigned as 40 percent of the value of the preferred stock, based on an allocation between common stock and preferred stock and their relative par values.
B) There is no allocation to the non-controlling interest because there are no dividends in arrears.
C) Income is assigned as 40 percent of the preferred stock dividends.
D) Income is assigned as 40 percent of the preferred stock dividends plus 30% of the subsidiary's income after subtracting all preferred stock dividends.
E) Income is assigned as 30 percent of the subsidiary's income after subtracting 60% of preferred stock dividends.