On January 1, 2014, Palmer, Inc

question 94

Multiple Choice

On January 1, 2014, Palmer, Inc. bought 40% of the outstanding shares of Arnold Corporation at a cost of $137,000. Palmer uses the equity method of accounting for this investment. During 2014, Arnold Corporation reported $30,000 of net income and paid a total of $10,000 in cash dividends. At the end of 2014, the shares had a fair value of $150,000. At what amount should the Arnold investment be reported at on the December 31, 2014 balance sheet?

• A) $150,000.
• B) $157,000.
• C)$145,000.
• D)$163,000.

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Definitions:

Restitution

Compensation or repayment for loss, damage, or injury caused to another party.

Tort

A wrongful act or infringement of a right leading to civil legal liability, not arising from a contract, but through negligence, defamation, and other such acts.

Electrician

A skilled tradesperson who installs, maintains, and repairs electrical systems and equipment.

Agent

An individual or entity authorized to act on behalf of another (the principal) in dealings with a third party.