Answered

LaFevor Co. acquired 70% of the common stock of Dean Corp. on August 1, 2022. For 2022, Dean reported revenues of $960,000 and expenses of $780,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $21,000. What is the effect of including Dean in consolidated net income for 2022

Answer :

abiolataiwo2015

Answer:

$66,250

Explanation:

Calculation for What is the effect of including Dean in consolidated net income for 2022

Effect of including Dean in consolidated net income for 2022=[($960,000-$780,000)*5/12]- ($21,000 × 5/12)

Effect of including Dean in consolidated net income for 2022=($180,000 × 5/12)- ($21,000 × 5/12)

Effect of including Dean in consolidated net income for 2022=$75,000-$8,750

Effect of including Dean in consolidated net income for 2022=$66,250

(Note that August 1 to December 31 will give us 5 months)

Therefore the effect of including Dean in consolidated net income for 2022 is $66,250

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