On January 1, 2012, Cale Corp

question 34

Multiple Choice

On January 1, 2012, Cale Corp. paid $1,020,000 to acquire Kaltop Co. Kaltop maintained separate incorporation. Cale used the equity method to account for the investment. The following information is available for Kaltop's assets, liabilities, and stockholders' equity accounts on January 1, 2012: Kaltop earned net income for 2012 of $126,000 and paid dividends of $48,000 during the year.
At the end of 2012, the consolidation entry to eliminate Cale's accrual of Kaltop's earnings would include a credit to Investment in Kaltop Co. for

• A) $124,400.
• B) $126,000.
• C) $127,000.
• D) $76,400.
• E) $0.

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Definitions:

Phospholipids

A type of lipid molecule that is a major component of the cell membrane, consisting of a phosphate group, a glycerol backbone, and two fatty acid tails.

Plasma Membrane

The biological membrane that separates the interior of all cells from the outside environment, protecting the cell and controlling movement of substances in and out.

Hydrophobic Region

A part of a molecule that is repelled by water and tends to be nonpolar.

Phospholipids

A class of lipids that are a major component of all cell membranes, essential for cellular function.