Assume That Company P Purchases a 10% Common Stock Interest

Multiple Choice

Assume that Company P purchases a 10% common stock interest in Company S for $12,000 on January 1, 20X2, and an additional 20% interest on January 1, 20X3, for $26,000. There was no excess of cost or book value on either investment. The balance sheets of Company, S which pays no dividends, follow: For 20X3, Company P reports investment income of ____.

A) $18,000
B) $12,000
C) $9,000
D) $6,000