On January 1, 2010, Cale Corp. paid $1,020,000 to acquire Kaltop Co. Kaltop maintained separate incorporation. Cale used the equity method to account for the investment. The following information is available for Kaltop's assets, liabilities, and stockholders' equity accounts: See Image for information. Kaltop earned net income for 2010 of $126,000 and paid dividends of $48,000 during the year. In Cale's accounting records, what amount would appear on December 31, 2010 for equity in subsidiary earnings? Multiple Choice $79,000. $81,800. $125,000. $127,000. $77,000.
On January 1, 2010, Cale Corp. paid $1,020,000 to acquire Kaltop Co. Kaltop maintained separate incorporation. Cale used the equity method to account for the investment. The following information is available for Kaltop's assets, liabilities, and stockholders' equity accounts: See Image for information. Kaltop earned net income for 2010 of $126,000 and paid dividends of $48,000 during the year. In Cale's accounting records, what amount would appear on December 31, 2010 for equity in subsidiary earnings? Multiple Choice $79,000. $81,800. $125,000. $127,000. $77,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2010, Cale Corp. paid $1,020,000 to acquire Kaltop Co. Kaltop maintained separate incorporation. Cale used the equity method to account for the investment. The following information is available for Kaltop's assets, liabilities, and
See Image for information.
Kaltop earned net income for 2010 of $126,000 and paid dividends of $48,000 during the year.
In Cale's accounting records, what amount would appear on December 31, 2010 for equity in subsidiary earnings?
Multiple Choice
-
$79,000.
-
$81,800.
-
$125,000.
-
$127,000.
-
$77,000.
Transcribed Image Text:Current assets
Land
Building (twenty year life)
Equipment (ten year life)
Current liabilities
Long-term liabilities
Common stock
Additional paid -in capital
Retained earnings
Book
Value
$ 120,000
72,000
240,000
540,000
24,000
120,000
228,000
384,000
216,000
Fair
Value
$ 120,000
192,000
268,000
516,000
24,000
120,000
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