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On January 1, 20X3, Parent Corporation acquired 25 percent of the outstanding shares of Sub Corporation for $100,000 cash. Sub Company reported net income of $75,000 and paid dividends of $30,000 for both 20X3 and 20X4. The fair value of shares held by Parent was $110,000 and $105,000 on December 31, 20X3 and 20X4 respectively.. If instead, Parent could not exercise significant influence over the investee, by what amount will Parent's 20X3 income increase due to its investment in Sub? O $12,500 O $11,250 O $17,500 O $7,500 13

On January 1, 20X3, Parent Corporation acquired 25 percent of the outstanding shares of Sub Corporation for $100,000 cash. Sub Company reported net income of $75,000 and paid dividends of $30,000 for both 20X3 and 20X4. The fair value of shares held by Parent was $110,000 and $105,000 on December 31, 20X3 and 20X4 respectively.. If instead, Parent could not exercise significant influence over the investee, by what amount will Parent's 20X3 income increase due to its investment in Sub? O $12,500 O $11,250 O $17,500 O $7,500 13

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 20X3, Parent Corporation acquired 25 percent of the outstanding shares of Sub Corporation for $100,000 cash. Sub Company reported net income of $75,000 and paid dividends of $30,000 for both 20X3 and 20X4. The fair value of shares held by Parent was $110,000 and $105,000 on December 31, 20X3 and 20X4 respectively.. If instead, Parent could not exercise significant influence over the investee, by what amount will Parent's 20X3 income increase due to its investment in Sub? O $12,500 O $11,250 O $17,500 O $7,500 13
Transcribed Image Text:On January 1, 20X3, Parent Corporation acquired 25 percent of the outstanding shares of Sub Corporation for $100,000 cash. Sub Company reported net income of $75,000 and paid dividends of $30,000 for both 20X3 and 20X4. The fair value of shares held by Parent was $110,000 and $105,000 on December 31, 20X3 and 20X4 respectively.. If instead, Parent could not exercise significant influence over the investee, by what amount will Parent's 20X3 income increase due to its investment in Sub? O $12,500 O $11,250 O $17,500 O $7,500 13
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