Barking Power Company Accounts for Its 35% Investment in Pipeline

question 31

Multiple Choice

Barking Power Company accounts for its 35% investment in Pipeline Corporation under the equity method of accounting. The investment was made on January 1, 2020, at a cost of $625,000. Pipeline Corporation reported net income of $85,000 for the year ended December 31, 2020, and paid total dividends of $20,000 during 2020. On December 31, 2020, after making all appropriate entries, the balance in Barking Power Company's Long-Term Investment account will equal:

• A) $647,750
• B) $583,000
• C) $690,000
• D) $602,250