On January 1, 2016, Palmer, Inc

Multiple Choice

On January 1, 2016, Palmer, Inc. bought 40% of the outstanding shares of Arnold Corporation at a cost of $137,000. Palmer uses the equity method of accounting for this investment. During 2016, Arnold Corporation reported $30,000 of net income and paid a total of $10,000 in cash dividends. At the end of 2016, the shares had a fair value of $150,000. At what amount should the Arnold investment be reported at on the December 31, 2016 balance sheet of Palmer, Inc.?

A) $150,000.
B) $157,000.
C) $145,000.
D) $163,000.