Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: 2019 2020 2021Net income$100,000 $120,000 $130,000 Dividends 40,000 50,000 60,000 ??Assume the initial value method is applied.?How much does Pell record as Income from Demers for the year ended December 31, 2019?
A. $74,400.
B. $32,000.
C. $73,000.
D. $42,400.
E. $41,000.
Answer: B
You might also like to view...
Answer the following statements true (T) or false (F)
1) Cost of Goods Sold appears on a multi-step income statement but not on a single-step income statement. 2) The net income calculated using either the single-step or multi-step income statement formats is always the same. 3) Operating income equals gross profit minus operating expenses. 4) Under IFRS, Cost of Goods Sold represents a functional expense which explains the purpose of the cost incurred. 5) A single-step income statement shows subtotals for gross profit and operating income.
The type of product costing system used by a company is dictated by the
A) project manager. B) production process. C) company president. D) plant supervisor.
Use the information in Scenario 9.7. What is the cost of holding the safety stock necessary to maintain the 98% service level?
A) less than or equal to $30 B) greater than $30 but less than $40 C) greater than $40 but less than $50 D) greater than $50
What is identity theft? What can individuals do to make this crime more difficult for criminals?