Kaye Company Acquired 100% of Fiore Company on January 1

question 21

Multiple Choice

Kaye Company acquired 100% of Fiore Company on January 1, 2011. Kaye paid $1,000 excess consideration over book value which is being amortized at $20 per year. Fiore reported net income of $400 in 2011 and paid dividends of $100. Assume the initial value method is applied. How much will Kaye's income increase or decrease as a result of Fiore's operations?

• A) $400 increase.
• B) $300 increase.
• C) $380 increase.
• D) $100 increase.
• E) $210 increase.

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