Clocktower Corporation Reported Net Income for the Current Year of $370,000

question 59

Multiple Choice

Clocktower Corporation reported net income for the current year of $370,000 and paid cash dividends of $50,000.Slide Company holds 40 percent of the outstanding voting stock of Clocktower.However,another corporation holds the other 60 percent ownership and does not take Slide's wants and wishes into consideration when making financing and operating decisions for Clocktower.What investment income should Slide recognize for the current year?

• A) $0
• B) $20,000
• C) $128,000
• D) $148,000

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Definitions:

Liquidity

The ease with which an asset can be converted to cash without affecting its market price.

Homemade Dividends

The concept where investors sell a portion of their portfolio to create cash flow, as an alternative to relying on traditional dividends from investments.

Dividend Policy

A company's strategy or guidelines for making dividend payments to its shareholders.

Share Value

The price at which a particular share of stock is traded on the market, determined by supply and demand.