Use the Following Information for Questions

question 84

Multiple Choice

Use the following information for questions.
During calendar 2017, Caraway Corp.reported net income of $60,000 and paid total cash dividends of $20,000.Seed Inc.owns 3,000 of the 10,000 outstanding shares of Caraway and exercises significant influence.
-How much income from its investment in Caraway should Seed report in 2017?

• A)$60,000
• B)$20,000
• C)$18,000
• D)$30,000

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Definitions:

Consolidated Net Income

The total net income of a parent company and its subsidiaries after eliminating intra-group transactions and distributions.

Fair Value Allocations

The process of assigning fair value to the individual assets and liabilities acquired during a business combination.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit over time.

Acquisition Method

An accounting process used during the consolidation of financial statements that involves combining the buying and selling entities' assets and liabilities.