Cashen Co. paid $2,400,000 to acquire all of the common stock of Janex Corp. on January...
Cashen Co. paid $2,400,000 to acquire all of the common stock of Janex Corp. on January 1, 2017. Janex's reported earnings for 2017 totaled $432,000, and it paid $120,000 in dividends during the year. The amortization of allocations related to the investment was $24,000. Cashen's net income, not including the investment, was $3,180,000, and it paid dividends of $900,000. MC Qu. 19 On the consolidated financial statements... On the consolidated financial statements for 2017, what amount should have been shown for consolidated dividends? Multiple Choice
a. $876,000.
b. $996,000.
c. $1,020,000.
d. $948,000.
e. $900,000.
Homework Answers
Answer is "E" : 900,000 $
Reason : Since Cashen Co. owns all shares of Janex Co., dividend of 120,000 $ declared by Janex will be eliminated in the consolidated financial statements since it is an inter-company transaction as an expense for Janex and income for Cashen.
Hence only dividend left to be shown in the consolidated financial statements is 900,000$ and there is no other adjustment mentioned in the question which is required to be made for this.
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Cashen Co. paid $2,400,000 to acquire all of the common stock of
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