Perimeter,Inc

Multiple Choice

Perimeter,Inc.acquired 30 percent of South Co.'s (South) voting stock for $200,000 on January 1,20X1.Perimeter's 30 percent interest in South gave Perimeter the ability to exercise significant influence over South's operating and financial policies.On that date,South reported assets of $500,000 and liabilities of $100,000.South had equipment with a book value of $60,000 that was actually worth $160,000.The equipment had a remaining useful life of five years.During 20X1,South reported net income of $80,000 and paid dividends of $50,000.What amount of income should Perimeter recognize in 20X1 as a result of this investment?

A) $18,000
B) $4,000
C) $15,000
D) $16,750