Problem:
Peacoat Corporation acquired 80 percent of Sweater Corporation's common stock on March 31, 20X4, for $360,000. At that date, the fair value of the noncontrolling interest was $90,000. On January 1, 20X4, Sweater reported the following stockholders' equity balances:
Common Stock ($10 par value) $ 150,000
Additional Paid-In Capital 75,000
Retained Earnings 200,000
Total Stockholders' Equity $ 425,000
Sweater reported net income of $100,000 in 20X4, earned uniformly throughout the year, and declared and paid dividends of $40,000 on December 31, 20X4. Peacoat reported retained earnings of $500,000 on January 1, 20X4, and had 20X4 income of $200,000 from its separate operations. Peacoat paid dividends of $50,000 on December 31, 20X4. Peacoat accounts for its investment in Sweater Corporation using the fully adjusted equity method.
Based on the information provided, what is the consolidated net income reported for the year 20X4?
Multiple Choice:
- $200,000
- $260,000
- $275,000
- $280,000