Accounting -Under the equity method, the investment account always reflects only the

| January 30, 2017

Question
Under the equity method, the investment account always reflects only the:

Historical cost of the investment
Dividends paid by the investee corporation
Investor’s interest in the net assets of the investee
Investor’s share of net income
Winner Corporation reported accrual basis sales of $300,000, cost of goods sold of $120,000, and operating expenses, taxes, and interest summing to $45,000. In evaluating Winner’s comparative balance sheets, it is determined that accounts receivable increased $15,000, inventory increased $7,500, and accounts payable decreased $10,500. There were no changes in prepaid expenses nor were there any interest or taxes payable at the beginning or end of the year. How much was cash basis income for Winner Corporation for the year?

a. $68,000

b. $82,000

c. $105,000

d. $112,000

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