Heartfelt Company Owns a 40% Interest in the Voting Common

Multiple Choice

Heartfelt Company owns a 40% interest in the voting common stock of Candle Corporation, and Heartfelt accounts for the investment using the equity method. During 2014, 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, 2014. How much investment income should Heartfelt report during 2014 from the Candle investment?

A) $36,000.
B) $40,000.
C) $4,000.
D) $10,000.