On January 1,20X7,Yang Corporation Acquired 25 Percent of the Outstanding

question 7

Multiple Choice

On January 1,20X7,Yang Corporation acquired 25 percent of the outstanding shares of Spiel Corporation for $100,000 cash.Spiel Company reported net income of $75,000 and paid dividends of $30,000 for both 20X7 and 20X8.The fair value of shares held by Yang was $110,000 and $105,000 on December 31,20X7 and 20X8 respectively.
-Based on the preceding information,what amount will be reported by Yang as balance in investment in Spiel on December 31,20X8,if it used the equity method of accounting?

• A)$111,250
• B)$118,750
• C)$100,000
• D)$122,500

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