On January 1,20X8,Pullman Company Acquired 30 Percent of Skate Company's

Multiple Choice

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

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