Scott Co. paid $2,800,000 to acquire all of the common stock of Dawn Corp. on January 1, 2020. Dawn's reported earnings for 2020 totaled $512,000, and it paid $160,000 in dividends during the year. The amortization of allocations related to the investment was $28,000. Scott's net income, not including the investment, was $3,310,000, and it paid dividends of $950,000.What is the amount of consolidated net income for the year 2020?
A) $3,150,000.
B) $3,282,000.
C) $3,310,000.
D) $3,794,000.
E) $3,822,000.

Question

Quizplus · Accepted Answer

Consolidated net income is calculated by adding Scott's net income ($3,310,000) to Dawn's net income ($512,000) and then subtracting the amortization of allocations ($28,000). Thus, $3,310,000 + $512,000 - $28,000 = $3,794,000.

Scott Co Paid $2,800,000 to Acquire All of the Common Stock