Prime Industries Acquired a 70 Percent Interest in Suburbia Company

question 37

Multiple Choice

Prime Industries acquired a 70 percent interest in Suburbia Company by purchasing 14,000 of its 20,000 outstanding shares of common stock at book value of $210,000 on January 1, 2016. Suburbia reported net income in 2016 of $90,000 and in 2017 of $120,000 earned evenly throughout the respective years. Prime received $24,000 dividends from Suburbia in 2016 and $36,000 in 2017. Prime uses the equity method to record its investment. Prime should record investment income from Suburbia during 2017 of:

• A) $36,000
• B) $120,000
• C) $84,000
• D) $48,000

Understand the definitions and basic concepts related to plant assets, including obsolescence and salvage value.

Comprehend the principles and methods of depreciation, including straight-line and accelerated methods.

Recognize the accounting treatment and financial reporting requirements for plant assets.

Understand the impact of asset depreciation on financial statements over time.

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Definitions:

Harvard University

A prestigious Ivy League university located in Cambridge, Massachusetts, known for its scholarly research, diverse programs, and influence in various fields.

Psychoanalysis

A therapeutic approach and theory of psychology developed by Sigmund Freud, focusing on unconscious mental processes and conflicts.

Early Childhood Experiences

Events and interactions during the early years of life that significantly influence an individual's development, personality, and behavior patterns.

Phineas Gage

A famous case from the 19th century of a railroad construction foreman who survived a severe brain injury that dramatically changed his personality and behavior, contributing to the understanding of the brain's role in personality and behavior.