Pepe, Incorporated Acquired 60% of Devin Company on January 1

question 33

Multiple Choice

Pepe, Incorporated acquired 60% of Devin Company on January 1, 2012. On that date Devin sold equipment to Pepe for $45,000. The equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years. Devin reported net income of $300,000 and $325,000 for 2012 and 2013, respectively. Pepe uses the equity method to account for its investment in Devin.
What is the consolidated gain or loss on equipment for 2012?

• A) $0.
• B) $9,000 gain.
• C) $9,000 loss.
• D) $21,000 gain.
• E) $21,000 loss.

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Definitions:

Abraham Maslow

An American psychologist best known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs.

Conflicts

Situations or internal states in which incompatible goals, needs, or desires lead to psychological tension and struggle.

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors.

Reinforcement Value

The significance or appeal of a potential reward that strengthens or increases the likelihood of a desired response or behavior.