Kaye Company Acquired 100% of Fiore Company on January 1

question 97

Multiple Choice

Kaye Company acquired 100% of Fiore Company on January 1, 2011. Kaye paid $1,000 excess consideration over book value which is being amortized at $20 per year. Fiore reported net income of $400 in 2011 and paid dividends of $100.
-Assume the partial equity method is applied. How much will Kaye's income increase or decrease as a result of Fiore's operations?

• A) $400 increase.
• B) $300 increase.
• C) $380 increase.
• D) $280 increase.
• E) $480 increase.

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Definitions:

Gondwana

An ancient supercontinent that included present-day Africa, South America, Antarctica, India, and Australia, existing from the late Neoproterozoic until its break-up in the Jurassic period.

Southern Hemisphere

The half of Earth that lies south of the Equator, encompassing continents like Australia, Antarctica, and parts of Africa, South America, and Asia.

Appalachian Mountains

A mountain range in Eastern North America, extending from the Canadian province of Newfoundland and Labrador to central Alabama in the United States.

Canadian Shield

A vast area of mostly crystalline rocks exposed in the eastern half of Canada and the Great Lakes region of the United States.