On January 1,2010,Palmer,Inc

Multiple Choice

On January 1,2010,Palmer,Inc.bought 40% of the outstanding shares of Arnold Corporation at a cost of $137,000.The equity method of accounting for this investment is used.During 2010,Arnold Corporation reported $30,000 of net income and paid $10,000 in cash dividends.At the end of 2010,the shares had a market value of $150,000.How much income will Palmer report from the Arnold investment during 2010?

A) $12,000
B) $30,000
C) $10,000
D) $4,000