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On January 2, Year 1, Peace Co. paid $310,000 to purchase 75% of the voting shares of Surge Co. Peace reported retained earnings of $80,000,
On January 2, Year 1, Peace Co. paid $310,000 to purchase 75% of the voting shares of Surge Co. Peace reported retained earnings of $80,000, and Surge reported contributed capital of $300,000 and retained earnings of $100,000. The purchase differential was attributed to depreciable assets with a remaining useful life of 10 years. Peace used the equity method in accounting for its investment in Surge. Surge reported net income of $20,000 and declared and paid dividends of $8,000 during the current year. Peace reported income, exclusive of its income from Surge, of $30,000 and declared and paid dividends of $15,000 during the current year. What amount will Peace report as dividends declared and paid in its Year 1 consolidated statement of retained earnings? A. $8,000 B. $15,000 C. $21,000 D. $23,000
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