Senn reported 20X5 net income of $40,000 and paid dividends…
Senn reported 20X5 net income of $40,000 and paid dividends of $12,000 during the year. Penn acquired 30% of Senn’s shares on January 1, 20X5, for $110,000. On December 31, 20X5, Penn determined the fair value of Senn’s shares to be $125,000. Penn reported operating income of $80,000 for 20X5. Compute Penn’s net income for 20X5, assuming that it carries the investment in Senn at fair value and uses the equity method of accounting for its investment in Senn . This is a two-part question. Be sure to answer both parts, a and b. When entering your answers, round the answers to the nearest dollar, enter the answers as numbers with no decimal places and no dollar ($) signs, and enter the numbers with or without the comma separator (e.g., either 28,374 or 28374). For partial credit, please do the following: After stating your answers, use the partial-credit question that follows to show how you arrived at them (e.g., 13,000 ). Include any explanations or logic you used to arrive at your answers.