Gunnar Ltd B) C) D)

question 26

Multiple Choice

Gunnar Ltd. owns 100% of the common shares of Ivy Ltd. During the year, Gunnar reported net income of $108,000, including its income from its investment in Ivy accounted for under the cost method. Ivy reported net income of $20,000 and paid dividends of $8,000 during the year. What net income will be reported by Gunnar on its separate-entity financial statements under the equity method and on its consolidated financial statements?

• A) \[\begin{array} { | l | l | }
• \hline \text { Equity Method } & \text { Consolidated Financial Statements } \\
• \hline\$ 112,000 & \$ 112,000\\\hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Equity Method } & \text { Consolidated Financial Statements } \\
• \hline\$ 112,000 & \$ 120,000\\\hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Equity Method } & \text { Consolidated Financial Statements } \\
• \hline\$ 120,000 & \$ 112,000\\\hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Equity Method } & \text { Consolidated Financial Statements } \\
• \hline\$ 120,000 & \$ 120,000\\\hline
• \end{array}\]

---

Definitions:

Clarification

The process of making something clear or understandable by providing more details or simplifying the explanation.

Reflection

Reflection refers to the return of light, heat, sound, or energy from a surface, or the act of serious thought or consideration.

Clarification

A process of making something less confusing or more comprehensible by providing more details or explanation.

Industrial Diseases

Illnesses and conditions that are a direct result of work or occupational environment.