On January 1, 2016, Turtle Inc

Multiple Choice

On January 1, 2016, Turtle Inc. bought 30% of the outstanding shares of Shell Corporation common stock at a cost of $150,000. Turtle uses the equity method of accounting for this investment is used. During 2016, Shell Corporation reported $40,000 of net income and paid a total of $5,000 in cash dividends. At the end of 2016, the shares had a fair value of $160,000. How much investment income will Turtle report for equity in affiliate earnings during 2016?

A) $12,000.
B) $22,000.
C) $10,500.
D) $1,500.