On January 1, 2012, Franel Co

question 69

Multiple Choice

On January 1, 2012, Franel Co. acquired all of the common stock of Hurlem Corp. For 2012, Hurlem earned net income of $360,000 and paid dividends of $190,000. Amortization of the patent allocation that was included in the acquisition was $6,000.
How much difference would there have been in Franel's income with regard to the effect of the investment, between using the equity method or using the initial value method of internal recordkeeping?

• A) $190,000.
• B) $360,000.
• C) $164,000.
• D) $354,000.
• E) $150,000.

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Definitions:

Meaningful Patterns

Recognizable arrangements or sequences that have significance or give insight into a particular phenomenon or data set.

Crowdsourcing

Involves obtaining ideas, services, or content by soliciting contributions from a large group of people, especially from an online community.

Automobile Business

The automobile business encompasses all aspects of the design, manufacture, marketing, and sale of motor vehicles, including cars, trucks, and motorcycles, playing a critical role in global economic and industrial development.

Crowdsourcing

The method of gathering data, suggestions, or contributions for a project or task by recruiting the help of many individuals, commonly through the internet.