On January 1,20X9 Athlon Company acquired 30 percent of the common stock of Opteron Corporation,at underlying book value.For the same year,Opteron reported net income of $55,000,which includes an extraordinary gain of 40,000.It did not pay any dividends during the year.By what amount would Athlon's investment in Opteron Corporation increase for the year,if Athlon used the equity method?
A) $0
B) $16,500
C) $4,500
D) $12,000

Question

Quizplus · Accepted Answer

Athlon's share of Opteron's net income is $16,500 (30% x $55,000). Since Opteron did not pay any dividends, Athlon's investment in Opteron Corporation would increase by $16,500 for the year.

On January 1,20X9 Athlon Company Acquired 30 Percent of the Common