ACCT - Chapter 17 (Computation)

Tracy Company owns 4,000 of the 10,000 outstanding shares of Penn Corporation common stock. During 2018, Penn earns $450,000 and pays cash dividends of $150,000. If the beginning balance in the investment account was $900,000, the balance at December 31, 2018 should be a. $900,000. b. $1,020,000. c. $1,080,000. d. $1,200,000.

b. $1,020,000.

The following information relates to Windom Company for 2018: Realized gain on sale of available-for-sale debt securities $45,000 Unrealized holding gains arising during the period on available-for-sale debt securities 90,000 Reclassification adjustment for gains included in net income 30,000 Windom's 2018 comprehensive income is a. $75,000. b. $105,000. c. $135,000. d. $165,000.

b. $105,000.

How much investment income should Dexter report in 2018? a. $240,000. b. $216,000. c. $144,000. d. $720,000.

b. $216,000.

If Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2018 for $290,000 and during 2019 Dobbs Company had net income of $150,000 and paid a cash dividend of $60,000, applying the fair value method would give a debit balance in the Equity Investments (Dobbs) account at the end of 2019 of a. $230,000. b. $290,000. c. $320,000. d. $308,000.

b. $290,000.

If Goebel Company acquired a 30% interest in Dobbs Company on December 31, 2018 for $440,000 and during 2019 Dobbs Company had net income of $150,000 and paid a cash dividend of $60,000, applying the equity method would give a debit balance in the Equity Investments (Dobbs) account at the end of 2019 of a. $440,000. b. $467,000. c. $485,000. d. $422,000.

b. $467,000.

Brown Corporation earns $720,000 and pays cash dividends of $240,000 during 2018. Dexter Corporation owns 3,000 of the 10,000 outstanding shares of Brown. What amount should Dexter show in the investment account at December 31, 2018 if the beginning of the year balance in the account was $960,000? a. $1,176,000. b. $960,000. c. $1,104,000. d. $1,440,000.

c. $1,104,000.

Myers Company acquired a 60% interest in Gannon Corporation on December 31, 2017 for $1,775,000. During 2018, Gannon had net income of $1,000,000 and paid cash dividends of $250,000. At December 31, 2018, the balance in the investment account should be a. $1,775,000. b. $2,375,000. c. $2,225,000. d. $2,525,000.

c. $2,225,000.

Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for $600,000 on January 2, 2018. During 2018, Darby Company declared dividends of $100,000 and reported earnings for the year of $400,000. If Blanco Company used the fair value method of accounting for its investment in Darby Company, its Equity Investments (Darby) account on December 31, 2018 should be a. $580,000. b. $660,000. c. $600,000. d. $680,000.

c. $600,000.

If Blanco Company uses the equity method of accounting for its investment in Darby Company, its Equity Investments (Darby) account at December 31, 2018 should be a. $580,000. b. $600,000. c. $660,000. d. $680,000.

c. $660,000.

Tracy should report investment revenue for 2018 of a. $60,000. b. $120,000. c. $150,000. d. $180,000.

d. $180,000