Use the Following Information to Answer the Question(s) Below

question 33

Multiple Choice

Use the following information to answer the question(s) below.

Pascoe Corporation paid $450,000 for a 90% interest in Sarabet Corporation on January 1, 2014, when Sarabet's stockholders' equity consisted of $250,000 Common Stock and $50,000 Retained Earnings. The book values and fair values of Sarabet's assets and liabilities were equal when Pascoe acquired its interest.

The separate net incomes (excluding investment income) of Pascoe and Sarabet for 2014 were $600,000 and $100,000, respectively. Dividends declared and paid during 2014 were $250,000 for Pascoe and $50,000 for Sarabet. Pascoe uses the entity theory in consolidating its financial statements with those of Sarabet.

-Pascoe's income from Sarabet under the equity method for 2014 was

• A)$72,000.
• B)$87,500.
• C)$90,000.
• D)$100,000.

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Definitions:

Fraternal Twin

Twins that develop from two different eggs fertilized by two different sperm, making them genetically similar as typical siblings rather than identical.

Genetic Factors

Components found in the genetic material of an organism that affect characteristics, actions, and the likelihood of developing specific diseases or conditions.

Schizophrenia

A serious mental disorder in which people interpret reality abnormally, often experiencing a combination of hallucinations, delusions, and extremely disordered thinking and behavior.

Negative Symptoms

In the context of mental health, symptoms that represent a reduction or absence of normal behaviors, thoughts, or emotions, often found in schizophrenia.