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

question 29

Multiple Choice

Use the following information to answer the question(s) below.

On January 1, 2014, Pamplin Corporation's 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, 2014, 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 2014 was $100,000.

On January 1, 2014, no preferred dividends are in arrears. No dividends are declared or paid in 2014. In a separate transaction on January 1, 2014, Pamplin purchased 70% of Sage's preferred stock for $600,000.

-For the year ending December 31,2014,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:

Exploitative

Exploitative describes actions or conditions that take unfair advantage of others, often in a way that is unethical or unjust.

Carson Strong

A person's name, lacking context for a definition without additional information.

Human Reproductive Cloning

The creation of a genetically identical copy of a human, focusing specifically on reproducing human DNA.

Ethically Wrong

A moral judgment indicating that an action or decision is contrary to ethical principles or moral law.