REFERENCE: Ref.01_05 Dodge,Incorporated Acquires 15% of Gates Corporation on January 1,2007,for $105,000

REFERENCE: Ref.01_05
Dodge,Incorporated acquires 15% of Gates Corporation on January 1,2007,for $105,000 when the book value of Gates was $600,000.During 2007 Gates reported net income of $150,000 and paid dividends of $50,000.On January 1,2008,Dodge purchased an additional 25% of Gates for $200,000.Any excess cost over book value is attributable to goodwill with an indefinite life.The fair-value method was used during 2007 but Dodge has deemed it necessary to change to the equity method after the second purchase.During 2008 Gates reported net income of $200,000 and reported dividends of $75,000.
-The income reported by Dodge for 2007 with regard to the Gates investment is

A) $7,500.
B) $22,500.
C) $15,000.
D) $100,000.
E) $150,000.