Multiple Choice
On January 1,20X4,Pony Company acquired 25% of Stallion Company's common stock at underlying book value of $200,000.Stallion has 80,000 shares of $10 par value,6 percent cumulative preferred stock outstanding.No dividends are in arrears.Stallion reported net income of $270,000 for 20X4 and paid total dividends of $140,000.Pony uses the equity method to account for this investment.
-Based on the preceding information,what amount of investment income will Pony Company report from its investment in Stallion for the year?
A) $140,000
B) $67,500
C) $55,500
D) $35,000
Correct Answer:
Verified
Correct Answer:
Verified
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