ABC Owns a 35 Percent Interest in the Voting Common

question 33

Multiple Choice

ABC owns a 35 percent interest in the voting common of XYZ and uses the equity method. For 2013, XYZ reported income of $120,000 and declared cash dividends of $40,000. If the carrying value of XYZ investment was $290,000 on January 1, 2013, ABC should (a) recognize investment revenue for 2013, and (b) report the carrying value of the investment, as follows: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline\text { (a) Imrestment Resenue }&\text { (b) Camying Value }\\\hline 1) & \$ 14,000 & \$ 276,000 \\\hline 2 ) & \$ 28,000 & \$ 290,000 \\\hline 3 ) & \$ 42,000 & \$ 318,000 \\\hline 4 ) & \$ 42,000 & \$ 332,000 \\\hline\end{array}\end{array}$$

• A) Choice 1
• B) Choice 2
• C) Choice 3
• D) Choice 4