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

question 29

Multiple Choice

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

On January 1, 2013, Pansy Company acquired a 10% interest in Sunflower Corporation for $80,000 when Sunflower's stockholders' equity consisted of $400,000 capital stock and $100,000 retained earnings. Book values of Sunflower's net assets equaled their fair values on this date. Sunflower's net income and dividends for 2013 through 2015 were as follows:


-Assume that Pansy has significant influence and uses the equity method of accounting for its investment in Sunflower.The balance in the Investment in Sunflower account at December 31,2015 was

• A)$78,200.
• B)$80,000.
• C)$81,800.
• D)$83,300.

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Definitions:

Goodwill

An intangible asset reflecting the value of a business above its tangible assets and liabilities, often associated with its brand, customer base, and reputation.

Sense of Ownership

The psychological state or feeling whereby an individual identifies with or feels a possessive connection to an object or property.

Sense of Satisfaction

The feeling of contentment or fulfillment that comes from achieving or accomplishing something.

Confirmation Bias

The tendency to process information by looking for, or interpreting, information that is consistent with one’s existing beliefs.