On January 2, 2017, Pfizer Co. purchased 22% of Wiley Company's voting stock for $150,000. During 2017, Wiley recorded income of $102,000 and paid total dividends of $27,000. Pfizer uses the equity method to account for this investment. What is Pfizer's income from the Wiley investment?

Question

Quizplus · Accepted Answer

Under the equity method, Pfizer recognizes its share of Wiley's income, which is 22% of $102,000, equaling $22,440. Dividends do not affect the income recognized under the equity method.