Use the Following Information to Answer the Question(s)below

question 21

Multiple Choice

Use the following information to answer the question(s) below.
On January 1,2011,Pamplin Corporation stockholders' equity consisted of $1,000,000 of $10 par value Common Stock,$750,000 of Additional Paid-in Capital,and $3,000,000 of Retained Earnings.On January 1,2011,Pamplin purchased 90% of the outstanding common stock of Sage Corporation for $1,500,000 with all excess purchase cost assigned to goodwill.The stockholders' equity of Sage on this date consisted of $800,000 of $100 par value,8% cumulative,preferred stock callable at $105,$900,000 of $10 par value common stock and $500,000 of Retained Earnings.Sage's net income for 2011 was $100,000.
On January 1,2011,no preferred dividends are in arrears.No dividends are declared or paid in 2011.In a separate transaction on January 1,2011,Pamplin purchased 70% of Sage's preferred stock for $600,000.
-For the year ending December 31,2011,the amount of Pamplin's income from Sage (associated with the common stock investment in Sage) is

• A)$32,400.
• B)$36,000.
• C)$60,000.
• D)$90,000.

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Definitions:

Cost-Benefit Analysis

An economic approach to decision-making that compares the financial costs and benefits of a project or decision to determine its viability.

Training Program

An organized and structured series of educational activities or resources designed to enhance the skills, knowledge, and efficiency of employees.

Cognitive Approach

A method in psychology that focuses on understanding how people process information, think, and learn, emphasizing mental functions.

Socialization

The process by which individuals learn and adopt the customs, values, and behaviors appropriate to their society or social group.