Howard, Inc. paid $400,000 to acquire all of the common stock of Fisherman Corp. on January...
Howard, Inc. paid $400,000 to acquire all of the common stock of Fisherman Corp. on January 1, 2020. Fisherman’s reported earnings for 2020 totaled $99,000, and it paid $33,000 in dividends during the year. The amortization of allocations related to undervalued assets was $9,000. Howard’s net income, not including the investment, was $753,000, and it paid dividends of $48,000
21. What amount would appear as Equity Income on the consolidated income statement?
a. $-0-
b. $57,000
c. $90,000
d. $99,000
22. What are consolidated dividends for 2020?
a. $81,000
b. $48,000
c. $33,000
d. $-0-
Homework Answers
Howard, Inc. paid $400,000 to acquire all of the common stock of Fisherman Corp. on January 1, 2020.
21 . Its Means Fisherman Corp is wholly subsidiary of Howard Inc.
so There 100% Earning consolidated with Howard Inc.
Earning = 99,000
Amortization of Undervalued Assets = 9,000
Actual Earning, which will be consolidated with Howard Inc is $90,000/-
option C is Correct.
22. $48,000/-
Option B is correct.
Dividend declared by Fisherman Corp., is received by Howard Inc., it means it is part of profit of the Company.
So actual Declaration for Shareholder is $48,000/-
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