Denber Co. acquired 60% of the common stock of Kailey Corp. on September 1, 2010. For 2010, Kailey reported revenues of $810,000 and expenses of $630,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $15,000.

-Kailey in consolidated net income for 2010?
A)$31,000.
B)$33,000.
C)$55,000.
D)$60,000.
E)$39,000.

Question

Denber Co. acquired 60% of the common stock of Kailey Corp. on September 1, 2010. For 2010, Kailey reported revenues of $810,000 and expenses of $630,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $15,000.

-Kailey in consolidated net income for 2010?

-Kailey in consolidated net income for 2010?
A)$31,000.
B)$33,000.
C)$55,000.
D)$60,000.
E)$39,000.

Quizplus · Accepted Answer

Since Kailey owns 60% of the shares, her proportionate share of consolidated net income would be: $50,000 x 0.6 = $30,000. Additionally, she received $25,000 in dividend income, which brings her total income to $30,000 + $25,000 = $55,000. Therefore, the correct answer is (C) $55,000.

Denber Co Acquired 60% of the Common Stock of Kailey Corp