Heartfelt Company owns a 40% interest in the voting common stock of Candle Corporation,accounted for using the equity method.During 2010,Candle Corporation reported net income of $100,000 and declared and paid cash dividends of $10,000.The carrying value of the Candle investment was $500,000 on January 1,2010.How much income should Heartfelt report during 2010 from the Candle investment?
A)$200,000.
B)$40,000.
C)$4,000.
D)$10,000.

Question

Quizplus · Accepted Answer

Investment income ($40,000) = Investee net income ($100,000) F1F1F1S1F1F1F10 Ownership percentage (40%)

Heartfelt Company Owns a 40% Interest in the Voting Common