On January 1, 2014, Palmer, Inc

question 63

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 is used. 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. What is the amount of Equity in Affiliate Earnings for 2014?

• A) $4,000.
• B) $12,000.
• C)$13,000.
• D)$21,000.

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Definitions:

Bank Statement Adjustment

The process of modifying the balance on a bank statement to reflect transactions that have not been recorded by the bank by the end of the reporting period.

Company Books Adjustment

The process of altering entries in the accounting records to reflect more accurate figures or to record unrecorded transactions.

Control Environment

A collection of guidelines, procedures, and frameworks that establish the foundation for executing internal control throughout the organization.

Risk Assessment

The process of identifying, analyzing, and evaluating risks involved in a specific situation or for a project.