Use the Following Information for Questions 105 and 106

question 89

Multiple Choice

Use the following information for questions 105 and 106.
Brown Corporation earns $480,000 and pays cash dividends of $160,000 during 2014. Dexter Corporation owns 3,000 of the 10,000 outstanding shares of Brown.
-How much investment income should Dexter report in 2014?

• A) $160,000.
• B) $144,000.
• C) $96,000.
• D) $480,000.

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Definitions:

Return Method

A sales return approach where the selling price of returned goods is deducted from gross sales to calculate net sales.

Capital Investment Analysis

The process by which management plans, evaluates, and controls long-term capital investments involving property, plant, and equipment.

Fixed Assets

Fixed Assets are long-term tangible assets purchased for use in business operations, intended to be used for more than one accounting period.

Long-term Investment

Investments made by a company to hold for more than one year, often in bonds, stocks, or real estate.