Reference no: EM132690958

Powell Corporation purchased 90% of the common stock of Scott Corporation on January 1, 20x5, for $400,000. Scott Corporation's stockholders' equity on that date was as follows:

Common stock, $10 par value $300,000
Other contributed capital 100,000
Retained earnings 50,000

Problem 1: During 20x5, Scott Corporation earned $200,000 and declared an $80,000 dividend. The difference between implied and book value relates to the misvaluation of Scott Corporation land. Powell accounts for its investment in Scott by the cost method. In addition, two eliminating entries are made in the 12/31/x5 consolidating workpaper. Which of the following accounts (with dollar amounts) would be included within those eliminating entries?

a.A credit to Noncontrolling Interest for $40,000.
b.A credit to Land for $50,000.
c.A credit to Common Stock for $300,000.
d.A credit to Dividends Declared for $72,000.