P Company Purchased 80% of the Outstanding Common Stock of S

question 25

Multiple Choice

P Company purchased 80% of the outstanding common stock of S Company on May 1, 2017, for a cash payment of $1,272,000. S Company's December 31, 2016 balance sheet reported common stock of $800,000 and retained earnings of $540,000. During the calendar year 2017, S Company earned $840,000 evenly throughout the year and declared a dividend of $300,000 on November 1. What is the amount needed to establish reciprocity under the cost method in the preparation of a consolidated workpaper on December 31, 2018?

• A) $208,000
• B) $260,000
• C) $248,000
• D) $432,000

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