On January 1, 2012, Cale Corp Kaltop Earned Net Income for 2012 of $126,000 and Paid

question 25

Multiple Choice

On January 1, 2012, 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 stockholders' equity accounts on January 1, 2012: $\begin{array}{lrr}&\text { Book } & \text { Fair } \\&\text { Value } & \text { Value }\\\text { Current assets } & \$ 120,000 & \$ 120,000 \\\text { Land } & 72,000 & 192,000 \\\text { Building (twenty year life) } & 240,000 & 268,000 \\\text { Equipment (ten year life) } & 540,000 & 516,000 \\\text { Current liabilities } & 24,000 & 24,000 \\\text { Long -term liabilities } & 120,000 & 120,000 \\\text { Common stock } & 228,000 & \\\text { Additional paid -in capital } & 384,000 & \\\text { Retained earnings } & 216,000 &\end{array}$ Kaltop earned net income for 2012 of $126,000 and paid dividends of $48,000 during the year. The 2012 total amortization of allocations is calculated to be

• A)$4,000.
• B)$6,400.
• C)$(2,400).
• D)$(1,000).
• E)$3,800.

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Definitions:

General Adaptation Syndrome

A three-stage response (alarm, resistance, exhaustion) that the body goes through when under stress, as proposed by Hans Selye.

Alarm Stage

The initial reaction of the body's stress response system, involving activation of the sympathetic nervous system to prepare to face or flee from a threat.

Sympathetic Nervous System

A part of the autonomic nervous system that activates the body's responses under stress, triggering the fight-or-flight response.

Parasympathetic Nervous System

The part of the autonomic nervous system responsible for conservation of energy and relaxation of the body, often referred to as the "rest and digest" system.