1. Kaye Company acquired 100% of Fiore Company on January 1, 2018. Kaye paid $1,000 excess consideration over book value, which is being amortized at $20 per year. There was no goodwill in the combination. Fiore reported net income of $400 in 2018 and paid dividends of $100.

Assume the equity method is applied. How much equity income will Kaye report on its internal accounting records as a result of Fiore's operations?

Multiple Choice

a. $400

b. $300

c. $380

d. $280

e. $480

2. Mittelstaedt Inc., buys 60 percent of the outstanding stock of Sherry, Inc. Sherry owns a piece of land that cost $295,000 but had a fair value of $660,000 at the acquisition date. What value should be attributed to this land in a consolidated balance sheet at the date of takeover?

Multiple Choice

a. $660,000.

b. $177,000.

c. $365,000.

d. $483,000.