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How much income should x report from the investment

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On January 1st The fair value of A's investment was $81,000. 2019, X Company purchased 15% of the common shares of B Company for $80,000. At that time, the shareholders' equity of B had a book value of $400,000. Any purchase discrepancy was allocated to equipment, which had a useful life of 5 years. B's net income during the year was $120,000. B paid dividends of $100,000 on its common shares.

Problem 1: Assume that X accounts for its investment in B using the cost method. How much income should X report from its investment in B for 2019?

a. $11,000

b. $14,000

c. $15,000

d. $18,000.

Reference no: EM132691141

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