Reference no: EM131781709

Question - On January 1, 2010 Cale Corp. paid $1,020,000 to acquire Kaltop Co.  Kaltop maintained separate incorporation.  Cale used the equity method to account for the investment.  The following information is available for Kaltop's assets, liabilities, and stockholder's equity accounts:

                                             Book Value           Fair Value

Current Assets                        $120,000              $120,000

Land                                      72,000                  192,000

Building (20 yr life)                  240,000                268,000

Equipment (10 yr life)              540,000                516,000

Current Liabilities                    24,000                  24,000

Long-Term Liabilities               120,000                 120,000

Common Stock                      228,000                

APIC                                     384,000

Retained Earnings                  216,000

Kaltop earned net income for 2010 of $126,000 and paid dividends of $48,000 during the year.

The 2010 total amortization of allocations is calculated to be?

a) $4,000

b) $6,400

c) ($2,400)

d) ($1,000)

e) $3,800

In Cale's accounting records, what amount would appear on December 31, 2010 for equity in subsidiary earnings?

a) $77,000

b) $79,000

c) $125,000

d) $127,000

e) $81,800

What is the balance in Cale's Investment in subsidiary account at the end of 2010?

a) $1,099,000

b) $1,020,000

c) $1,096,200

d) $1,098,000

e) $1,144,400