On January 1,20X8,Pullman Company Acquired 30 Percent of Skate Company's

question 14

Multiple Choice

On January 1,20X8,Pullman Company acquired 30 percent of Skate Company's common stock,at underlying book value of $100,000.Skate has 100,000 shares of $2 par value,5 percent cumulative preferred stock outstanding.No dividends are in arrears.Skate reported net income of $150,000 for 20X8 and paid total dividends of $72,000.Pullman uses the equity method to account for this investment.
-Based on the preceding information,what amount would be reported by Pullman Company as the balance in its investment account on December 31,20X8?

• A)$100,000
• B)$123,400
• C)$120,400
• D)$142,000

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Definitions:

Secured Notes

Debt securities backed by collateral, providing lenders with assurance of repayment through the borrower's assets in case of default.

Mortgages

Loans specifically used to purchase real estate, where the property itself serves as collateral.

Deferred Revenue

Payments received by a company for goods or services that have yet to be delivered or performed.

Net Income

The total profit of a company after all expenses, taxes, and costs have been deducted from total revenue.