Use the Following Information for Questions

question 65

Multiple Choice

Use the following information for questions
Fossil Company purchased 200 of the 1,000 outstanding shares of Ericksen Company's common shares for $60,000 on January 2, 2011.During 2011, Ericksen Company declared dividends of
$10,000 and reported earnings for the year of $40,000.
-If Fossil Company uses the cost model of accounting for its investment in Ericksen Company, its Investment in Ericksen Company account on December 31, 2011 should be

• A)$58,000.
• B)$66,000.
• C)$68,000.
• D)$60,000.

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Definitions:

Semiannual Interest

The payment of interest on a loan or bond twice a year.

Bond Interest Expense

The cost incurred by an issuer of bonds for the interest payments made to bondholders.

Cash

Liquid assets held by a company or person, used for transactions or as a store of value.

Maturity Date

The date on which a financial obligation must be repaid or settled in full.