Ashley Company Ashley Company Purchased 2,000 of the 10,000 Outstanding Shares of Shares

question 16

Multiple Choice

Ashley Company
Ashley Company purchased 2,000 of the 10,000 outstanding shares of Judd, Inc.'s common stock for $60,000 on January 1, 2010.During 2010, Judd declared a dividend of $5 per share and reported net income of $75,000.At the end of 2010 the market value of a share of Judd, Inc.stock has increased to $32 per share.
-If Ashley Company accounts for the investment as a minority,active investment and uses the equity method to account for the investment,then Ashley will recognize what amount of 2010 income from the investment?

• A) $4,000
• B) $10,000
• C) $25,000
• D) $15,000

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Definitions:

Misjudgment

An incorrect or unfair assessment or opinion.

Assimilation Theory

Process by which a minority becomes socially, economically, and culturally absorbed within the dominant society.

Social Change

The transformation over time of social institutions, practices, norms, and patterns of behavior within a society.

Intersectional Theory

An analytical framework that explores how aspects of a person's social and political identities might combine to create unique modes of discrimination and privilege.