Plum IncAcquired 90% of the Capital Stock of Sterling Co

question 24

Multiple Choice

Plum Inc.acquired 90% of the capital stock of Sterling Co.on 1/1/16 at a cost of $540,000.On this date Sterling had equipment (10-year life) carried at $200,000 under market and total equity amounting to $350,000. ​
On 1/1/16 Sterling acquired 5% (10,000 shares) of Plum's outstanding common stock for $3 per share.Internally generated net income was $50,000 for Plum and $40,000 for Sterling.
Consolidated net income for 2017 is

• A)​$90,000
• B)​$86,000
• C)​$83,500
• D)​$70,000

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