GNR Inc Owns 100% of NMX Inc

question 58

Multiple Choice

GNR Inc. owns 100% of NMX Inc. During the year, NMX Inc. earned a net income of $40,000 and paid dividends of $10,000. Assuming that GNR Inc. uses the Equity Method, what effect would the above information have on GNR's investment in NMX account?

• A) An increase of $10,000.
• B) An increase of $30,000.
• C) An increase of $40,000.
• D) No effect.

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