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 will be affected on Rocky Company's books to account for the increase in market value of the investment at the end of Year 1?

A) none
B) Cash increase $44 million and Stockholders' Equity increase $44 million
C) Investments increase $44 million and Stockholders' Equity increase $44 million
D) Investments increase $4 million and Stockholders' Equity increase $4 million