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.On the consolidated financial statements for 2020, what amount should have been shown for consolidated dividends?

Question

Quizplus · Accepted Answer

In consolidated financial statements, only the parent company's dividends are reported. Therefore, Scott Co.'s dividends of $950,000 should be shown as the consolidated dividends.

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