Use the Following Information for Questions

question 25

Multiple Choice

Use the following information for questions
Caraway Corporation earns $120,000 and pays cash dividends of $40,000 during 2011.Macoon Corporation owns 3,000 of the 10,000 outstanding shares of Caraway and exercises significant influence.
-Dielman Co.acquired a 60% interest in Simpson Corp.on December 31, 2011 for $315,000.During 2012, Simpson had net income of $200,000 and paid cash dividends of
$50,000.Assuming Dielman used the equity method, at December 31, 2012, the balance in the investment account should be

• A)$405,000.
• B)$315,000.
• C)$435,000.
• D)$465,000.

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Definitions:

Lease

A contractual agreement by which one party conveys property, services, or land to another for a specified time, usually in return for a periodic payment.

Domestic Relationships

Interpersonal relationships that are characterized by a significant degree of personal intimacy or commitment, including family relationships and cohabitation.

Binding

The quality of being legally enforceable or imposing duties on the parties involved.

Enforceable Contract

A legal agreement that can be upheld in court, usually because it meets all necessary legal requirements.