Yaro Company Owns 30% of the Common Stock of Dew

question 86

Multiple Choice

Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to account for the investment. During 2011, Dew reported income of $250,000 and paid dividends of $80,000. There is no amortization associated with the investment. During 2011, how much income should Yaro recognize related to this investment?

• A) $24,000.
• B) $75,000.
• C) $99,000.
• D) $51,000.
• E) $80,000.

Understand and apply concepts of speed and efficiency in work-related contexts.

Understand how to calculate the percentage by which revenue exceeds operating expenses given the percentage of operating expenses to revenue.

Comprehend the relationship between the numerator and denominator in a fraction and their impact on the fraction's value.

Demonstrate proficiency in percentage calculations related to financial and mathematical contexts.

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Definitions:

Note Payable

A written promissory note where the borrower agrees to pay back the lender a specified amount of money at a future date or on demand.

Cash

A form of liquid asset that includes currency, coins, and balances in bank accounts, used by businesses to carry out transactions.

Common Stock

Equity ownership in a corporation, with holders usually having voting rights and receiving dividends variable with the company’s profitability.