Photo Finish Corporation Bought a 40% Interest in Click-It Corporation's

question 85

Multiple Choice

Photo Finish Corporation bought a 40% interest in Click-It Corporation's $1 par value voting common stock on March 31, 2017. On that date, Click-It paid $20 million for 2 million shares at a $10 market price per share. On December 31, 2017, Click-It paid a $1 million cash dividend declared earlier in 2017, and reported net income for the year ended 2017 of $10 million. On December 31, 2017, Click-It's stock was trading at $11.50 per share. What effect will the dividend have on the Photo Finish financial statements?

• A)It would increase cash and increase equity in affiliate earnings.
• B)It would increase cash and decrease the investment account.
• C)It would increase cash and increase net unrealized gains/losses.
• D)It would increase cash and increase the investment account.

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