What pear december income statement should report income

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Reference no: EM132794590

Pear Co.'s income statement for the year ended December 31, as prepared by Pear's controller, reported income before taxes of $125,000. The auditor questioned the following amounts that had been included in income before taxes:

Equity in earnings of Cinn Co. $ 40,000

Dividends received from Cinn 8,000

Adjustments to profits of prior years for

arithmetical errors in depreciation (35,000)

Problem 1: Pear owns 40% of Cinn's common stock, and no acquisition differentials are relevant. Pear's December 31 income statement should report income before taxes of

A. $85,000

B. $117,000

C. $120,000

D. $152,000

Reference no: EM132794590

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