Company P Purchased a 30% Interest in Company S on January

question 21

Multiple Choice

Company P purchased a 30% interest in Company S on January 1, 20X1, for $100,000.The price was equal to the book value of the equity acquired.The reported income (loss) and dividends paid by the Company S are as follows: ?

$\begin{array}{rrr}& \text { Income } & \text { Dividends } \\\text { Year } & \text { ( loss ) } & \text { Paid } \\\hline20 \mathrm{X} 1 & \$ 5,000 & \$ 5,000 \\20 \mathrm{X} 2 & (270,000) & 0 \\20 \mathrm{X} 3 & (100,000) & 0 \\20 \mathrm{X} 4 & 50,000 & 5,000\end{array}$

Investment income reported in 20X4 under the sophisticated equity method would be ____.

• A)-$15,000
• B)-$13,500
• C)-$4,000
• D)-$0

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Definitions:

Oxygen Source

A material or device that releases oxygen, used in various applications such as medical oxygen supplies, water treatment, and as a reactant in chemical processes.

Incomplete Combustion

A reaction process where fuel burns in insufficient oxygen, producing carbon monoxide, soot, or carbon alongside water.

Flammable Compounds

Substances that can ignite easily and burn rapidly, typically releasing heat and light.

Smoke Explosion

A sudden and intense combustion of suspended particles in a confined area, resulting from a mixture of air and combustible materials.