Use the Following Information for Questions 103 and 104

question 14

Multiple Choice

Use the following information for questions 103 and 104.
Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for $450,000 on January 2, 2015. During 2015, Darby Company declared dividends of $75,000 and reported earnings for the year of $300,000.
-If Blanco Company uses the equity method of accounting for its investment in Darby Company, its Equity Investment (Darby) account at December 31, 2015 should be

• A) $435,000.
• B) $450,000.
• C) $495,000.
• D) $510,000.

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Definitions:

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account after a purchase has been made, to continue holding the position.

Initial Margin

The percentage of the purchase price of securities (that can be bought on margin) that the investor must pay with his/her own cash or marginal securities.

Federal Reserve System

The central banking system of the United States, responsible for monetary policy, regulating banks, and ensuring financial system stability.