Use the Following Information for Questions

question 40

Multiple Choice

Use the following information for questions
Hat Inc.purchased 10,000 shares of Cat Co.'s common shares for $10 a share on January 1.During the year, Cat paid a $50,000 cash dividend and earned $300,000 net income.On December 31, the market value of Cat's stock was $8 a share.The investment is to be held as a long-term investment and the decline in value is not considered permanent.
-Assuming Hat owned 25 percent of Cat's outstanding shares; Hat would report investment revenue of:

• A)$7,500
• B)$42,500
• C)$62,500
• D)$75,000

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Definitions:

Unit of Capital

The smallest divisible amount of capital that can be invested in or allocated to a project or investment.

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A machine used in manufacturing to shape or cut materials by deforming them with a die and high pressure.

Production Costs

Represents the total expenses incurred in the manufacturing of a product, including materials, labor, and overhead.

Chrysler Belvedere

A line of American automobiles produced by Chrysler from the 1950s to the 1970s, known for its stylish design and spacious interiors.