Use the Information Below to Answer the Following Questions

question 36

Multiple Choice

Use the information below to answer the following questions:
On 1 January 2012, Yu Ltd acquired 100 000 shares (30% of the voting interest) in Ping Ltd for $900 000 cash. On 30 June 2012, Ping Ltd announced its earnings per share for the first 6 months of 2012 at $2.00 per share. On 20 November, Ping Ltd paid dividends to shareholders at $1.20 per share. On 31 December 2012, Ping Ltd announced its earnings per share for 2008 at $3.50 per share (i.e., $1.50 additional since 30 June) .
-If Yu Ltd used the equity method,what would have been the impact of Ping Ltd's 31 December 2012 earnings announcement?

• A) Investment in Ping Ltd would have increased by $150 000.
• B) Dividend revenue would have increased by $150 000.
• C) Investment in Ping Ltd would have increased by $150 000 and dividend revenue would have increased by $150 000.
• D) There would be no impact.

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Definitions:

Marginal Cost

The elevation in comprehensive cost stemming from the creation of one more unit of a good or service.

Fixed Cost

Fixed costs are business expenses that remain constant regardless of the quantity of goods or services produced, such as rent or salaries.

Total Cost

The sum of fixed and variable costs incurred by a firm in producing and distributing a specified level of output.

Marginal Cost

The expenditure involved in fabricating one more unit of a product or service.