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Pepe, Incorporated acquired 60% of Devin Company on January 1, 2012. On that date Devin...

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Accounting

Pepe, Incorporated acquired 60% of Devin Company on January 1, 2012. On that date Devin sold equipment to Pepe for $45,000. The equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years. Devin reported net income of $300,000 and $325,000 for 2012 and 2013, respectively. Pepe uses the equity method to account for its investment in Devin. Compute the income from Devin reported on Pepe's books for 2013.

a) $190,200. b) $196,000. c) $194,400. d) $187,000. e) $195,000.

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