Mize Company owns 30% interest in the stock of Lyte Corporation. During the year Lyte pays $20000 in dividends to Mize and reports $300000 in net income. Mize Company's investment in Lyte will increase Mize's net income by
A) $6000.
B) $90000.
C) $96000.
D) $10000.

Question

Quizplus · Accepted Answer

Mize Company's net income will increase by $90,000, which is 30% of Lyte Corporation's $300,000 net income. Dividends received do not affect net income but are considered a return on investment.

Mize Company Owns 30% Interest in the Stock of Lyte