What Amount of Equity Income Would Anderson Recognize in 2018

question 18

Multiple Choice

What amount of equity income would Anderson recognize in 2018 from its ownership interest in Barney?

• A) $12,000 income.
• B) $12,000 loss.
• C) $16,000 loss.
• D) $28,000 income.
• E) $28,000 loss.

---

Definitions:

Nominal Rate

The interest rate stated on a loan or financial product, not adjusted for inflation, representing the face value of the interest charged or earned.

Real Rate

The interest rate adjusted for inflation, representing the real cost of borrowing or the true return on investment, removing the inflationary impact.

Discounts

Reductions from the regular price of goods or services, often used as a strategy to increase demand or reward customers.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan remaining unpaid.