Figure:
Jans Inc -If the Partial Equity Method Had Been Applied, What Was

question 25

Multiple Choice

Figure:
Jans Inc. acquired all of the outstanding common stock of Tysk Corp. on January 1, 2009, for $372,000. Equipment with a ten-year life was undervalued on Tysk's financial records by $46,000. Tysk also owned an unrecorded customer list with an assessed fair value of $67,000 and an estimated remaining life of five years.
Tysk earned reported net income of $180,000 in 2009 and $216,000 in 2010. Dividends of $70,000 were paid in each of these two years. Selected account balances as of December 31, 2011, for the two companies follow. $$\begin{array} { l r r } & { \text { Jans } } & { \text { Tysk } } \\\text { Revenues } & \$ 1,080,000 & \$ 840,000 \\\text { Expenses } & 480,000 & 600,000 \\\text { Investment income } & \text { Not given } & 0 \\\text { Retained earnings, 1/1/11 } & 840,000 & 600,000 \\\text { Dividends paid } & 132,000 & 70,000\end{array}$$
-If the partial equity method had been applied, what was 2011 consolidated net income?

• A) $840,000.
• B) $768,400.
• C) $822,000.
• D) $240,000.
• E) $600,000.

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Definitions:

Disinflation

A drop in the pace of inflation, showing that the rate at which prices of goods and services climb is slowing down.

Deflation

A decrease in the general price level of goods and services, often indicating a contraction in the economy.

Misery Index

An economic indicator created by adding the unemployment rate to the inflation rate, proposing to reflect the average citizen's financial discomfort.

Nominal Interest Rate

The rate of interest before adjusting for inflation, representing the face value of interest payments.