On January 1, 20X8, William Company Acquired 30 Percent of EGate

question 50

Multiple Choice

On January 1, 20X8, William Company acquired 30 percent of eGate Company's common stock, at underlying book value of $100,000. eGate has 100,000 shares of $2 par value, 5 percent cumulative preferred stock outstanding. No dividends are in arrears. eGate reported net income of $150,000 for 20X8 and paid total dividends of $72,000. William uses the equity method to account for this investment.
-Based on the preceding information,what amount of investment income will William Company report from its investment in eGate for the year?

• A) $45,000
• B) $42,000
• C) $62,000
• D) $35,000

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Definitions:

Unfit Seed

Seeds that are unsuitable for planting due to poor quality, contamination, or being genetically modified without approval.

Lost Profits

Damages recoverable in a lawsuit, representing the amount of profit one party would have made had the other party not breached a contract or committed a wrongful act.

Replacement Seed

relates to seeds provided to replace initial batches that were defective or failed to germinate, ensuring agricultural productivity is not compromised.

Specific Performance

A legal remedy in contracts requiring the party who breached the contract to perform their contractual obligations, rather than simply paying damages.