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

question 79

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. In Cale's accounting records, what amount would appear on December 31, 2012 for equity in subsidiary earnings?

• A)$77,000.
• B)$79,000.
• C)$125,000.
• D)$127,000.
• E)$81,800.

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Definitions:

Voltage-Sensitive

Referring to mechanisms or devices that respond to changes in electrical potential or voltage across their membrane or structure.

Nerve Impulses

Electrical signals that transport information along the neurons, facilitating communication within the nervous system.

Movement

The act or process of moving, involving physical change in position or relocation of an object or organism.