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  3. on january 1, 2022, palmcroft co. acquired 100 per

On January 1, 2022, Palmcroft Co. acquired 100 percent of the outstanding voting shares of...

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Accounting

On January 1, 2022, Palmcroft Co. acquired 100 percent of the outstanding voting shares of Salt River, Inc., for $600,000 cash. At January 1, 2022, Salt Rivers net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Salt Rivers financial records by $80,000. Any remaining excess fair over book value was attributed to a database developed by Salt River (four-year remaining life), but not recorded on its books. Palmcroft applies the equity method to account for its investment in Salt River. Each year since the acquisition, Salt River has declared a $20,000 dividend. Salt River recorded net income of $70,000 in 2022 and $80,000 in 2023.

PalmcroftSalt River2024 Revenues$ 498,000$ 285,0002024 Expenses 350,000 195,0002024 Income from Salt River 55,000Retained earnings, 12/31/24 250,000 175,000

3-10. What is the consolidated net income for Palmcroft and Salt River for 2024?

  1. $148,000
  2. $203,000
  3. $228,000
  4. $238,000

3-11. What is Palmcrofts consolidated retained earnings balance at December 31, 2024?

  1. $250,000
  2. $290,000
  3. $330,000
  4. $360,000

3-12. On its December 31, 2024, consolidated balance sheet, what amount should Palmcroft report for Salt Rivers database?

  1. $10,000
  2. $20,000
  3. $25,000
  4. $50,000

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