E3-3 multiple-Choice Questions on Consolidated Balances [AICPA Adapted]Select the correct answer for each of the following questions.1. Par Corporation owns 60 percent of Sub Corporations outstanding capital stock. On May 1, 20X8, Par advanced Sub $70,000 in cash, which was still outstanding at December 31, 20X8. What portion of this advance should be eliminated in the preparation of the December 31, 20X8, consolidated balance sheet?a. $70,000. b. $42,000. c. $28,000. d. $0.Items 2 and 3 are based on the following:On January 2, 20X8, Pare Company acquired 75 percent of Kidd Companys outstanding com- mon stock. Selected balance sheet data at December 31, 20X8, are as follows:Total AssetsLiabilities Common Stock Retained EarningsPare Company$420,000$120,000 100,000 200,000$420,000Kidd Company$180,000$ 60,000 50,000 70,000$180,0002. In Pares December 31, 20X8, consolidated balance sheet, what amount should be reported as minority interest in net assets?a. $0. b. $30,000. c. $45,000. d. $105,000.3. In its consolidated balance sheet at December 31, 20X8, what amount should Pare report ascommon stock outstanding? a. $50,000. b. $100,000. c. $137,500.d. $150,000.4. At the time Hyman Corporation became a subsidiary of Duane Corporation, Hyman switched depreciation of its plant assets from the straight-line method to the sum-of-the-years-digits method used by Duane. As to Hyman, this change was aa. Change in an accounting estimate. b. Correction of an error. c.
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