Asked by Robin Jolly on Jun 17, 2024
Verified
How much investment income will Turtle report for equity in investee earnings during 2019?
A) $12,000.
B) $22,000.
C) $10,500.
D) $1,500.
Equity Method
An accounting technique used to reflect the investment in another company, typically applied when an investing entity holds significant influence over the investee.
Investee Earnings
The share of income that an investor recognizes from its investment in another entity.
Net Income
Net Income is the total profit or earnings of a company after all expenses, taxes, and costs have been deducted from total revenue.
- Evaluate the goodwill generated by acquisition activities and the profit from equity method investments.
Verified Answer
SG
Sanjita GautamJun 19, 2024
Final Answer :
A
Explanation :
Under the equity method, Turtle Inc. would recognize its share of Shell Corporation's net income, not the dividends received or changes in fair value. Turtle owns 30% of Shell, so it would report 30% of Shell's $40,000 net income, which is $12,000.
Learning Objectives
- Evaluate the goodwill generated by acquisition activities and the profit from equity method investments.