Tall Corporation acquired 75 percent of Light Corporation’s voting common stock on January 1, 20X2, at underlying book value. At the acquisition date, the book values and fair values of Light’s assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 25 percent of the total book value of Light. Noncontrolling interest was assigned income of $8,000 in Tall’s consolidated income statement for 20X2 and a balance of $65,500 in Tall’s consolidated balance sheet at December 31, 20X2. Light reported retained earnings of $70,000 and additional paid-in capital of $40,000 on January 1, 20X2. Light did not pay dividends or issue stock in 20X2.
Required a. Compute the amount of net income reported by Light for 20X2. b. Prepare the stockholders’ equity section of Light’s balance sheet at December 31, 20X2.
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