Prime Industries Acquired a 70 Percent Interest in Suburbia Company

question 28

Multiple Choice

Prime Industries acquired a 70 percent interest in Suburbia Company by purchasing 14,000 of its 20,000 outstanding shares of common stock at book value of $210,000 on January 1, 2016. Suburbia reported net income in 2016 of $90,000 and in 2017 of $120,000 earned evenly throughout the respective years. Prime received $24,000 dividends from Suburbia in 2016 and $36,000 in 2017. Prime uses the equity method to record its investment. The balance of Prime's Investment in Suburbia account at December 31, 2017 is:

• A) $210,000
• B) $285,000
• C) $297,000
• D) $315,000

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Definitions:

Temporal Lobes

The regions of the brain located beneath the Sylvian fissure on both cerebral hemispheres, involved in processing auditory information and encoding memory.

Information-Processing Model

A cognitive approach that compares the mind to a computer, emphasizing how information is input, processed, stored, and retrieved.

Iconic Memory

A type of visual sensory memory that holds a brief photographic image of a scene that has just been observed.

Capacity

The maximum amount that something can contain or the ability to perform, function, or produce effectively.