Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value method to account for this investment. Trace reported net income of $110,000 for 2013 and paid dividends of $60,000 on October 1, 2013. How much income should Gaw recognize on this investment in 2013?
A) $16,500.
B) $9,000.
C) $25,500.
D) $7,500.
E) $50,000.
Correct Answer:
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