Dot Co. acquired a 40% interest in Jefferson, Inc. with the excess of purchase price over book value solely attributable to equipment with a...

Dot Co. acquired a 40% interest in Jefferson, Inc. with the excess of purchase price over book value solely attributable to equipment with a five-year life and undervaluation by $100,000. During the year of acquisition, Jefferson reported net income of $150,000. What amount of Equity Income should Dot report on its income statement for the year of acquisition?

a. $80,000

b. $112,000

c. $120,000

d. $104,000

Answer: d