Question

Cashen Co. paid $2,400,000 to acquire all of the common stock of Janex Corp. on January 1, 2012. Janex's reported earnings for 2012 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.

Question :What is the amount of consolidated net income for the year 2012?A. $3,180,000.B. $3,612,000.C. $3,300,000.D. $3,588,000.E. $3,420,000.

Answer 1

D. $3,588,000

Step-by-step explanation:

The computation of the consolidated net income is shown below:

= Net income + earning - amortization of allocations

= $3,180,000 + $432,000 - $24,000

= $3,588,000

We simply added the earning and deduct the amortization of allocations to the net income so that the accurate amount can come.

All other information which is given is not relevant. Hence, ignored it