Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2010. During 2010, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of excess cost allocations totaled $60,000 in 2010.
-What is the effect of including Harbor in consolidated net income for 2010?
A) $350,000.
B) $308,000.
C) $500,000.
D) $440,000.
E) $290,000.

Question

Quizplus · Accepted Answer

The effect on consolidated net income is calculated by taking Harbor's net income ($2,500,000 - $2,000,000 = $500,000) and subtracting the amortization of excess cost allocations ($60,000), resulting in $440,000.

Femur Co Acquired 70% of the Voting Common Stock of Harbor