TEST BANK FOR ADVANCED ACCOUNTING, 14E JOE BEN HOYLE QUESTIONS WITH ANSWER KEY AT THE END 2026-2027(85pages)

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 1) Baker Company owns 15% of the common stock of Charlie Corporation and used the fair-value method to account for this investment. Charlie reported net income of $120,000 for 2021 and paid dividends of $70,000 on October 1, 2021. How much income should Baker recognize on this investment in 2021? A) $18,000. B) $10,500. C) $28,500. D) $7,500. E) $50,000. 2) Loeffler Company owns 35% of the common stock of Tetter Co. and uses the equity method to account for the investment. During 2021, Tetter reported income of $260,000 and paid dividends of $90,000. There is no amortization associated with the investment. During 2021, how much income should Loeffler recognize related to this investment? A) $90,000. B) $91,000. C) $122,500. D) $31,500. E) $59,500. 3) On January 1, 2021, Lee Company paid $1,870,000 for 80,000 shares of Thomas Co.’s voting common stock which represents a 45% investment. No allocation to goodwill or other specific account was necessary. Significant influence over Thomas was achieved by this acquisition. Thomas distributed a dividend of $2.00 per share during 2021 and reported net income of $720,000. What was the balance in the Investment in Thomas Co. account found in the financial records of Lee as of December 31, 2021?