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

question 10

Multiple Choice

P Company purchased 80% of the outstanding common stock of S Company on May 1, 2017, for a cash payment of $318,000. During the calendar year 2017, S Company earned $210,000 evenly throughout the year and declared a dividend of $75,000 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, 2017?

• A) $52,000
• B) $65,000
• C) $62,000
• D) $108,000

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