REFERENCE: Ref.01_15 Cayman Inc.bought 30% of Maya Company on January 1,2008 for 1,2008

question 41

Multiple Choice

REFERENCE: Ref.01_15
Cayman Inc.bought 30% of Maya Company on January 1,2008 for $450,000.The equity method of accounting was used.The book value and fair value of the net assets of Maya on that date were $1,500,000.Maya began supplying inventory to Cayman as follows:
Maya reported net income of $100,000 in 2008 and $120,000 in 2009 while paying $40,000 in dividends each year.
-What is the balance in Cayman's Investment in Maya account at December 31,2008?

• A)$463,500.
• B)$467,100.
• C)$468,000.
• D)$468,900.
• E)$480,000.

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Definitions:

Von Neumann-Morgenstern

A theory of expected utility which provides axioms for how rational individuals make decisions under uncertainty.

Utility Function

A mathematical representation of how different bundles of goods or services are valued by an individual or entity for satisfaction or utility.

Expected Utility

A theory in economics that calculates the anticipated utility resulting from different choices, taking into account the likelihood of various outcomes.

Income

The money received by an individual or organization for work, goods, or investments, typically measured over a period of time, such as monthly or annually.