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How much investment income would Pinnacle record

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Reference no: EM132430541

Question - On January 1, 20x1, Pinnacle, Inc. purchased 40% of the common stock of Valley Company for $61,000. At the date of acquisition, the following information for Valley Company was available:

Book Value Fair Market Value

Depreciable assets (remaining life, 5 years) $100,000 $105,000

Land 50,000 60,000

Total $150,000 $165,000

Liabilities $ 25,000 $ 25,000

Common stock 75,000

Retained earnings 50,000

Total $150,000

In 20x1, Valley earned $18,000 of net income and distributed $12,500 of dividends. How much investment income would Pinnacle record in 20x1?

a. $6,800

b. $7,200

c. $6,200

d. $7,600

Reference no: EM132430541

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