On January 1,2010,Turtle Inc.bought 30% of the outstanding shares of Shell Corporation at a cost of $150,000.The equity method of accounting for this investment is used.During 2010,Shell Corporation reported $40,000 of net income and paid $5,000 in cash dividends.At the end of 2010,the shares had a market value of $160,000.What investment balance will be reported on Turtle's December 31,2010 balance sheet?
A)$150,000
B)$160,000
C)$160,500
D)$162,000

Question

Quizplus · Accepted Answer

Shell investment ($160,500) = January 1, 2010 cost ($150,000) + Investment income [Investee net income ($40,000) F1F1F1S1F1F1F10 Ownership percentage (30%)] - Proportionate share of investee dividends ($5,000 F1F1F1S1F1F1F10 30%)