Chapter 5, Problem 5.21.2P

Multiple-Choice Questions on Applying the Equity Method [AICPA Adapted]
Select the correct answer for each the following questions.
2. On January 1, 20X3, Miller Company purchased 25 percent of Wall Corporation’s commonstock; no differential resulted from the purchase. Miller appropriately uses the equity methodfor this investment, and the balance in Miller’s investment account was $190,000 on December31, 20X3. Wall reported net income of $120,000 for the year ended December 31, 20X3, and paid dividends on its common stock totaling $48,000 during 20X3. How much did Miller pay for its 25 percent interest in Wall?
a. $172,000
b. $202,000
c. $208,000
d. $232,000