Prime Industries Acquired a 70 Percent Interest in Suburbia Company

question 28

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. The balance of Prime's Investment in Suburbia account at December 31, 2017 is:

• A) $210,000
• B) $285,000
• C) $297,000
• D) $315,000

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values. It quantifies how spread out the numbers are.

Empirical Rule

A statistical rule stating that for a normal distribution, nearly all data will fall within three standard deviations of the mean.

Bell-Shaped

Describes the graphical form of a distribution that is symmetric around its mean, visually represented as a bell-shaped curve, typically associated with the normal distribution.

Sample Standard Deviation

A measure of the dispersion or variability of a sample dataset, indicating how much the individual data points differ from the sample mean.