REFERENCE: Ref.05_08 On January 1,2009,Smeder Company,an 80% Owned Subsidiary of Collins,Inc. ,Transferred

question 4

Multiple Choice

REFERENCE: Ref.05_08
On January 1,2009,Smeder Company,an 80% owned subsidiary of Collins,Inc. ,transferred equipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for $84,000 cash.At the date of transfer,Smeder's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000.Straight-line depreciation is used.Smeder reported net income of $28,000 and $32,000 for 2009 and 2010,respectively.
-Compute Collins' share of Smeder's net income for 2009.

• A)$12,400.
• B)$14,400.
• C)$11,200.
• D)$12,800.
• E)$18,000.

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