The Following Information Applies to Questions 32 - 34

question 20

Multiple Choice

The following information applies to Questions 32 - 34
On January 1, 20X2, Ephraim Corporation acquired 80 percent of Lilac Corporation for $200,000 cash. Lilac reported net income of $25,000 each year and dividends of $5,000 each year for 20X2, 20X3, and 20X4. On January 1, 20X2, Lilac reported common stock outstanding of $160,000 and retained earnings of $40,000, and the fair value of the noncontrolling interest was $50,000. It held land with a book value of $90,000 and a market value of $100,000, and equipment with a book value of $40,000 and a market value of $48,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of eight years. All depreciable assets held by Lilac at the date of acquisition had a remaining economic life of eight years. Ephraim uses the equity method in accounting for its investment in Lilac.
-Based on the preceding information,what balance would Ephraim report as its investment in Lilac at January 1,20X4?

• A) $200,000
• B) $224,000
• C) $232,000
• D) $240,000

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Definitions:

Sympathetic Nervous System

A part of the autonomic nervous system that prepares the body for physical activity by increasing heart rate, constricting blood vessels, and raising blood pressure.

Accelerator

A device, typically a pedal, that controls the speed of a vehicle's engine.

Brain Structure

The physical organization and arrangement of different parts of the brain, including its various regions and neural connections.

Little Brain

A colloquial term for the cerebellum, a part of the brain that plays a key role in motor control.