Rock Company Acquired 40% of the Voting Stock of Hudson

question 66

Multiple Choice

Rock Company acquired 40% of the voting stock of Hudson Company for $40 million.In year 1, Hudson Company reports net income of $15 million and pays cash dividends of $5 million.At the end of the year the market value of Rock Company's investment in Hudson Company is $44 million.The _____ method should be used to account for the investment.

• A)market
• B)equity
• C)consolidated
• D)cost

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