Dalton Corp

question 99

Multiple Choice

Dalton Corp. owned 70% of the outstanding common stock of Shrugs Inc. On January 1, 2011, Dalton acquired a building with a ten-year life for $420,000. No salvage value was anticipated and the building was to be depreciated on the straight-line basis. On January 1, 2013, Dalton sold this building to Shrugs for $392,000. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2013, how does this transfer affect the calculation of Dalton's share of consolidated net income?

• A) Consolidated net income must be reduced by $44,800.
• B) Consolidated net income must be reduced by $50,400.
• C) Consolidated net income must be reduced by $49,000.
• D) Consolidated net income must be reduced by $56,000.
• E) Consolidated net income must be reduced by $34,300.

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Definitions:

Wisconsin Card Sorting Test

A neuropsychological test of set-shifting, measuring a person’s ability to display flexibility in the face of changing schedules of reinforcement.

Shift Strategy

A cognitive approach to changing the method or perspective used when solving problems or making decisions.

Lesion

Any damage or abnormal change in the tissue of an organism, usually caused by disease or trauma.

Temporal Cortex

A region of the cerebral cortex located on the sides of the brain, involved in processing auditory information and encoding memory.