On January 1, 20X8, William Company Acquired 30 Percent of EGate

Multiple Choice

On January 1, 20X8, William Company acquired 30 percent of eGate Company's common stock, at underlying book value of $100,000. eGate has 100,000 shares of $2 par value, 5 percent cumulative preferred stock outstanding. No dividends are in arrears. eGate reported net income of $150,000 for 20X8 and paid total dividends of $72,000. William uses the equity method to account for this investment.
-Based on the preceding information,what amount of investment income will William Company report from its investment in eGate for the year?

A) $45,000
B) $42,000
C) $62,000
D) $35,000