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Homework answers / question archive / On January 1, 2019, Spring Co
On January 1, 2019, Spring Co. purchased a 25% interest in Fall Inc. for $500,000. For the year ended December 31, 2019, Fall reported net income from operations of $65,000 and a loss from discontinued operations of $10,000 (net of tax). Fall paid dividends of $11,500 on December 31, 2019. Assume that Spring uses the equity method to account for its investment in Fall. Which of the following is the amount that would be reported on Spring's 2019 income statement relating to Fall? Multiple Choice Investment income of $13,750. O Dividend revenue of $2,875. O Investment income of $16,250 and investment loss, discontinued operations of $2,500. Investment income of $13,750 and investment loss, discontinued operations of $2,500.
Option C
SInce equity method is being used here, Spring Co would account for its share of the accounting profit and loss and include it in its statement of accounts.
