Bing Company owns 30% interest in the stock of Yeti Corporation. During the year, Yeti pays $60,000 in dividends to Bing, and reports $320,000 in net income. Bing Company's investment in Yeti l will increase Bing net income by
A) $96,000.
B) $78,000.
C) $60,000.
D) $18,000.

Question

Quizplus · Accepted Answer

Bing Company owns 30% of Yeti Corporation, so it recognizes 30% of Yeti's net income as its own. 30% of $320,000 is $96,000. Dividends received do not affect net income under the equity method.

Bing Company Owns 30% Interest in the Stock of Yeti