REFERENCE: Ref.05_08 On January 1,2009,Smeder Company,an 80% Owned Subsidiary of Collins,Inc. ,Transferred

Multiple Choice

REFERENCE: Ref.05_08
On January 1,2009,Smeder Company,an 80% owned subsidiary of Collins,Inc. ,transferred equipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for $84,000 cash.At the date of transfer,Smeder's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000.Straight-line depreciation is used.Smeder reported net income of $28,000 and $32,000 for 2009 and 2010,respectively.
-Compute Collins' share of Smeder's net income for 2010.

A) $27,600.
B) $23,600.
C) $27,200.
D) $24,000.
E) $34,000.