On January 1, 2017, Panda Company Purchased 25% of Skill

question 30

Multiple Choice

On January 1, 2017, Panda Company purchased 25% of Skill Company's common stock; no goodwill resulted from the acquisition. Panda Company appropriately carries the investment using the equity method of accounting and the balance in Panda's investment account was $190,000 on December 31, 2017. Skill reported net income of $120,000 for the year ended December 31, 2017 and paid dividends on its common stock totaling $48,000 during 2017. How much did Panda pay for its 25% interest in Skill?

• A) $172,000
• B) $202,000
• C) $208,000
• D) $232,000

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Definitions:

Neonatal Jaundice

Condition, in many newborn babies, caused by immaturity of liver and evidenced by yellowish appearance; can cause brain damage if not treated promptly.

Anoxia

A condition characterized by an absence of oxygen supply to an organ or a tissue.

Liver

A vital organ that performs essential functions such as detoxifying harmful substances, synthesizing proteins, and producing biochemicals necessary for digestion.

Eyeballs

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