On January 1, 20X4, Timber Company Acquired 25% of Johnson

Multiple Choice

On January 1, 20X4, Timber Company acquired 25% of Johnson Company's common stock at underlying book value of $200,000. Johnson has 80,000 shares of $10 par value, 6 percent cumulative preferred stock outstanding. No dividends are in arrears. Johnson reported net income of $270,000 for 20X4 and paid total dividends of $140,000. Timber uses the equity method to account for this investment.
-Based on the preceding information,what amount of investment income will Timber Company report from its investment in Johnson for the year?

A) $140,000
B) $67,500
C) $55,500
D) $35,000