Mandrake Corp Owns a 10% Interest in the Common Shares

question 21

Multiple Choice

Mandrake Corp owns a 10% interest in the common shares of Cobra Ltd. During this year, Cobra pays a total of $15,000 in dividends and reports $130,000 profit. Mandrake's investment in Cobra will increase Mandrake's profit by

• A)$15,000.
• B)$13,000.
• C)$12,500.
• D)$ 1,500.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset by evenly spreading its cost over the expected useful life.

Residual Value

The estimated salvage value or end-of-useful-life value of an asset after depreciation has been fully applied.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders' equity at a specific point in time, giving a snapshot of its financial condition.

Net Loss

The result when a company's total expenses exceed its total revenues during a specific period, indicating a financial loss.