A) $170,000.
B) $354,000.
C) $164,000.
D) $ 6,000.
E) $174,000.
Answer: D
Learning Objective: 03-02
Learning Objective: 03-03a
Learning Objective: 03-03c
Topic: Investment methods―Identify and differentiate
Topic: Investment and income―Equity method
Topic: Investment and income―Partial equity method
Difficulty: 1 Easy
Blooms: Apply
AACSB: Knowledge Application
AICPA BB: Critical Thinking
AICPA FN: Measurement
Feedback: Equity Method = $360,000 – $6,000 = $354,000 Equity income
Partial Equity Method = $360,000 – $0 (amortizations not recorded under partial equity method); $354,000 – $360,000 = $6,000 difference
REFERENCE: 03-03
Cashen Co. paid $2,400,000 to acquire all of the common stock of Janex Corp. on January 1, 2017. Janex’s reported earnings for 2017 totaled $432,000, and it paid $120,000 in dividends during the year. The amortization of allocations related to the investment was $24,000. Cashen’s net income, not including the investment, was $3,180,000, and it paid dividends of $900,000.
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