Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 5

Note: Problems 1 through 37 assume the use of the acquisition method.Problems 38 through 40 assume the use of the purchase method.
Use the following information for Problems 12 through 14:
West Company acquired 60 percent of Solar Company for $300,000 when Solar's book value was $400,000.The newly comprised 40 percent noncontrolling interest had an assessed fair value of $200,000.Also at the acquisition date, Solar had a trademark (with a 10-year life) that was undervalued in the financial records by $60,000.Also, patented technology (with a 5-year life) was undervalued by $40,000.Two years later, the following figures are reported by these two companies (stockholders' equity accounts have been omitted):
Assuming Solar Company has paid no dividends, what are the noncontrolling interest's share of the subsidiary's income and the ending balance of the noncontrolling interest in the subsidiary
a.$26,000 and $230,000.
b.$28,800 and $252,000.
c.$34,400 and $240,800.
d.$40,000 and $252,000.