Use the Following Information for Questions

question 22

Multiple Choice

Use the following information for questions.
On January 1, 2017, Abalone Ltd.acquired 30% of Flounder Corp.'s common shares for $240,000.During 2017, Flounder reported net income of $100,000 and paid total dividends of $60,000.Abalone's 30% interest in Flounder gives Abalone the ability to exercise significant influence over their operating and financial policies.During 2018, Flounder reported net income of $150,000 and paid total dividends of $30,000 on April 1 and $40,000 on October 1.On July 1, 2018, Abalone sold half of its shares in Flounder for $158,000 cash.
-Before income taxes, what income should Abalone include in its 2017 income statement as a result of this investment?

• A)$100,000
• B)$60,000
• C)$30,000
• D)$18,000

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Definitions:

Pendleton Civil Service Act

A federal law passed in 1883 that mandated positions within the federal government be awarded on the basis of merit instead of political affiliation, significantly curbing the spoils system.

President Rutherford B. Hayes

The 19th President of the United States, serving from 1877 to 1881, known for ending the Reconstruction era through the Compromise of 1877.

National Harmony

The state or condition where a nation's citizens or regions achieve social cohesion and cooperation, often pursued through policies aimed at reducing divisions or conflicts.

Sectional Rivalry

Competition and conflict between different regions or sections of a country, particularly evident in the United States pre-Civil War between the North and South over economic, cultural, and political differences.