Question
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $456,000 cash. The acquisition-date fair value of
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $456,000 cash. The acquisition-date fair value of the noncontrolling interest was $50,600. At January 1, 2016, Stars net assets had a total carrying amount of $354,200. Equipment (eight-year remaining life) was undervalued on Stars financial records by $51,200. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $44,800 in 2016 and $51,200 in 2017. Each year since the acquisition, Star has declared a $12,800 dividend. At January 1, 2018, Prides retained earnings show a $160,000 balance.
Selected account balances for the two companies from their separate operations were as follows:
Pride | Star | |||||
2018 Revenues | $ | 318,800 | $ | 182,500 | ||
2018 Expenses | 224,200 | 124,900 | ||||
What is consolidated net income for 2018?
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A. $120,500.
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B.$122,370.
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C.$123,900.
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D.$152,200.
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