REFERENCE: Ref.10_10 Kennedy Company Acquired All of the Outstanding Common Stock of Stock

question 52

Multiple Choice

REFERENCE: Ref.10_10
Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for US$350,000 on January 1,2009,when the exchange rate for the Canadian dollar was US$.70.The fair value of the net assets of Hastie was equal to their book value of C$450,000 (Canadian dollars) on the date of acquisition.Any excess cost over fair value was attributed to an unrecorded patent with a remaining life of five years.The functional currency of Hastie is the Canadian dollar.
For the year ended December 31,2009,Hastie's translated net income was $25,000.The average exchange rate for the Canadian dollar during 2009 was US$.68,and the 2009 year-end exchange rate was US$.65.
-Kennedy's share of Hastie's net income for 2009 would be

• A)$18,000.
• B)$15,000.
• C)$18,200.
• D)$16,000.
• E)$18,500.

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