Rocky Company Acquired 40% of the Voting Stock of Boulder

Multiple Choice

Rocky Company acquired 40% of the voting stock of Boulder Company for $40 million.At the end of Year 1,Boulder Company reports net income of $15 million and pays cash dividends of $5 million.At the end of Year 1,the market value of Rocky Company's investment in Boulder Company is $44 million.What accounts on Rocky Company's books would be affected by the dividends of Boulder Company?

A) none
B) Cash increase $2 million and Stockholders' Equity increases $2 million
C) Cash increase $5 million and Stockholders' Equity increases $5 million
D) Cash increase $2 million and Investments decrease $2 million