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,accounted for using the equity method.During 2010,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 1,2010.How much income should Heartfelt report during 2010 from the Candle investment?

A) $200,000.
B) $40,000.
C) $4,000.
D) $10,000.