Rocky Company Acquired 40% of the Voting Stock of Boulder

question 77

Multiple Choice

Rocky Company acquired 40% of the voting stock of Boulder Company for $40 million.At the end of Year 1,Boulder Company reports net income of $15 million and pays cash dividends of $5 million.At the end of Year 1,the market value of Rocky Company's investment in Boulder Company is $44 million.What accounts will be affected on Rocky Company's books to account for the increase in market value of the investment at the end of Year 1?

• A)none
• B)Cash increase $44 million and Stockholders' Equity increase $44 million
• C)Investments increase $44 million and Stockholders' Equity increase $44 million
• D)Investments increase $4 million and Stockholders' Equity increase $4 million

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Definitions:

Neural Wiring

The network of neurons and their connections in the brain which facilitate the transmission of signals and the operation of the nervous system.

Brain's Plasticity

The ability of the brain to change and adapt as a result of experience, learning, or injury.

Flexibility

The ability to adapt to new, different, or changing requirements and situations.

Prefrontal Cortex

The front part of the frontal lobe in the brain, implicated in a variety of complex behaviors including planning, decision making, and moderating social conduct.